The British government has allowed the pound to float which has had the effect of revaluing upwards Sterling against the United States dollar.
CU Newspaper headlines announcing rise in pound (3 shots)
GV EXT Midland Bank Foreign Exchange branch
GV & CU Activity inside Foreign Exchange office. Clerks working busily (8 Shots)
SCU Mr. David Wilkins, Manager of Foreign Exchange speaking
CU Buyer on telephone purchasing two million pounds
GV EXT Bankers' Trust
SCU Mr. Ted Holloway speaking
CU TV monitor ZOOM OUT TO GV activity in Foreign Exchange office in Bankers' Trust
WILKINS: "Well provided that we can manage to keep imports to keep imports and exports going nicely along, also our inflation rate down, then there is no reason why the pound doesn't have a rosy future. In fact I'm very optimistic that this will happen in the next year."
BUYER: "You want dollars/sterling ....just a second. 15.25. One-fifteen-25. Hullo. Take two million at 25."
QUESTION: "Mr. Holloway this town is in touch with every bank throughout the world. What do you think will be the effect on the dollar?"
HOLLOWAY: "Well the intervention change of policy this morning obviously had an initial impact on the dollar but this will only probably be a short term factor and we could possibly help the dollar to a degree in a very modest nature."
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Background: 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 .