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The Outlook Of The British Pound

2009 has been a roller coaster ride for the world economies. These ups and downs are experienced in the value of their currencies and the British pound has suffered along with the rest. Although the United Kingdom is expected to be of the first countries to recover from the current worldwide economic downturn, it will largely depend on how quick the credit markets are restored throughout and after 2009.

Oil prices have driven inflation lower in Great Britain, but consumer price grown is above the percentage targets set by the central bank. The Bank of England has been very aggressive in cutting back interest rates to the lowest in 57 years and they are committed to prevent deflation from a recession. However, these low interest rates, although not as low as the US, will keep the pound weak until they can raise them again after consumer confidence is restored. In addition, the weakness of the pound is a key ingredient to the recovery of the economy because many travelers will flock to the UK because of their stronger currency against the pound.

Because the pound has managed to remain the highest valued currency throughout 2009 and not fall below the euro as some had predicted, the outlook of the British pound as an investment is promising. The economy of the UK still faces a lot of risks, but there is much more hope of recovery at the end of 2009 then there was in the beginning. The global economy has begun to recover slowly and the UK economy is expected to outperform its global peers due to the Bank of England and their proactive behavior.

The British pound sells off significantly well and this provides additional stimulus for a recovery from a battered economy. The economy in the United Kingdom is much further along than the rest of Europe and the United States and their failing economies will push the British pound into recovery at a quicker rate. With quantitative easing of interest rates in the US causing the dollar to fall sharply, the recovery of the pound could begin even sooner. An expected growth in holiday shopping for 2009 will be a good indicator of how well the economy is coming with its recovery. In the end, the pound is a highly stable currency with a great outlook for the future. If history repeats itself, then the pound will continue to remain at the top of global currencies.

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Modified:02/02/2011
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