British Pound Rallies on Surprisingly Strong Inflationary Pressures

The British pound gained strength today as investors were greeted with some positive news from the G7 meetings where Chancellor Darling reassured that the UK housing markets would not deteriorate as much as the US housing market due to limited subprime exposure, and also indicated that steps will be taken in order to make banks and mortgage lenders ease their borrowing rate.

On the economic front, UK released their PPI figures; Input prices hit a record high, as producers fight against rising commodity prices, while output prices rose at the fastest pace in 17 years. This has fueled speculation that tomorrow’s CPI figures would also be stronger, as consumers are expected to bear the burden of higher input prices.