The Strength of the British Pound

Paper Summary:

This well-researched paper analyzes the recent increase in the British pound's value which is a direct result of rising interest rates and the UK's growing economy. The writer of this paper details the reasons surrounding the devaluation of the U.S. dollar against the British pound and the Euro. This paper discusses the monetary flows in the foreign exchange market that are not only imperative but responsible for the various positive changes in Britain's economy. The writer also describes how the value of a particular currency is estimated when using three-time tested variables which are comprised of the interest rate differentials, economic differentials and relative yield within the country.

From the Paper:

"As stated by the Economist, Justin Urquhart Stewart, the imbalance is basically because of two main factors. On being the higher central bank interest rates in Britain which is nearly 4 percent while it is only 1 percent in the United States and in turn supports the British currency but at the same time the high level of by the government and individuals for personal purpose in the United States is not very supportive of growth. It is felt that if both the issues are balanced the dollar will be brought back to its state. A lot of financial experts also feel that the exchange rate to go to $2.00 to one pound or higher in the next some time hence making things even more badly."

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