9th August 2012
Sterling finished trading yesterday slightly down on the dollar at $1.5588 as investors reacted to the lasted announcements from the Bank of England.
The GBP did rise as far as $1.5605 before the latest UK data and only finished 0.2 per cent down against the USD.
Governor of the Bank Sir Mervyn King said that despite the growth forecast in the UK being cut to virtually zero, but the inflation report was better than some traders expected.
He explained that the British contraction in the last three-quarters had been hit by one-off factors and the construction sector in particular was likely to bounce back.
However, now analysts fear that sterling will lose its perceived reputation as a forex trading safe haven, reports Reuters.
The European Central bank recently stated it was to resume buying Spanish and Italian bonds to reduce the sky-high interest rates seen in the debt stricken countries and that has further fuelled investor sentiment for the single currency.
Currently the euro is worth 78.80p, but experts think within the next quarter this could reach 83.00p.
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