17th August 2011
An expert has warned that sterling's growing reputation as a safe haven for currency investors may prove to be short-lived.
Speaking to the Telegraph, William Poole at FC Exchange suggested a worsening economic backdrop in recent weeks has seen the British currency lose much of its appeal among those involved in forex trading.
He pointed to the latest negative economic assessment from Bank of England governor Mervyn King, who last week lowered the UK's growth prospects and stressed that the recovery is slowing.
In its latest inflation report, the central bank reduced its projection for gross domestic product growth for next year from 2.5 per cent to nearer two per cent.
"Reiteration came from King that obstacles to the recovery are intensifying 'by the day', leading many traders and investors to begin betting against the pound," Mr Poole told the publication.
"Britain's attraction as a haven has been crumbling since."
The newspaper suggested that last week's riots in several major English cities, which were covered by media outlets across the world, may also have altered the current perception of sterling in trading markets.
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