British Pound Back Above 2.0 Despite Softer Inflation Data

The Federal Reserve’s rate decision has taken the British pound back above 2.0. US dollar weakness has overshadowed recent concerns about the UK economy.

Consumer prices were in line with expectations, with the exception of the annualized pace of CPI growth which was 1.8 percent against 1.9 percent expected. The government’s guarantee of Northern Rock’s deposits has done nothing to stop depositors from withdrawing funds. The minutes from the last monetary policy meeting are due for release tomorrow, which will shed more light on the Bank of England’s degree of concern about the economic impact of the credit market turmoil on the UK economy.

Written by Kathy Lien, Chief Currency Strategist of