To put current valuations in perspective, it is helpful to take a look at a monthly chart of the sterling/U.S. dollar (Figure 2). From a low at $1.36 in June 2001, the pound has staged a stunning rally to the April 2007 high just above the $2.00 region.
“The rally has been spectacular over the past couple of years,” says Bob Lynch, head of G-10 FX Strategy Americas-HSBC.
He pointed to overall weakness in the U.S. dollar, continued rate hikes in Britain, and higher-than-expected growth as factors behind the rally in the pound. Another longer-term issue, which has provided underlying support to the pound in recent years, is increasing interest by global central banks in the sterling as a reserve currency, which has pumped up demand.
Subscribe to:
Post Comments (Atom)
Post a Comment