The British government has allowed the pound to float which has had the effect of revaluing upwards Sterling against the United States dollar.
The British government has allowed the pound to float which has had the effect of revaluing upwards Sterling against the United States dollar. The result was that the pound rose seven cents against the dollar. Economists say this gives an indication of the renewed strength of the British economy and reflects huge influx of foreign capital while reducing the risk of renewed inflation.
SYNOPSIS: The decision of the British government was not unexpected in financial circles and that fact alone emphasises the restrengthening of the British economy. Only last year, Britain seemed to be in dire financial straits but its recovery has been put down to the great influx of foreign investment and strong government measures to curb inflation and control wage demands. On an official level, the Treasury announced that the Bank of England would adjust its intervention policies, which means it would no longer step in and sell large amounts of sterling to keep the exchange rate down. The pound rose seven cents against the dollar in the first few hours of trading. But the main concern now is that unemployment in England could rise because exports will have increased in value. It also means that companies that rely no overseas sales will have to take less profit in dollar terms. But what of the future of the pound itself?
But will the decision mean that the U.S. dollar will continue to slide?
That sentiment has been reinforced on an official level by U.S. Treasury Secretary Michael Blumenthal who said that strength of the dollar was assured .