The British Pound At An All Time High

The British pound has recently been enjoying its status in the forex trading system as it reached an all time high in September 2007, hitting $2.03 conversion against the dollar. As the oldest currency used in the world today, the British pound has a valid status that no other currency has, but its strength has cemented its status as one of the most important currencies on the foreign exchange market today. However, financial crises and the rate of inflation looks set to propel it upwards yet again in the near future, or so financial experts are suggesting.

In terms of its availability and importance of the British pound, it is the fourth currency on the most traded list according to forex brokers, who only cite the US dollar, the Euro and the Japanese Yen above it today. However, in terms of the global currency reserves, it is third behind the dollar and the Euro. In other words, the pound is extremely popular within the forex trading system and many individuals follow its progress closely to ascertain when the optimum time to trade is.

The recent all time high superseded the all time high set earlier in 2007, when the British pound initially broke the $2 mark for the first time since 1992 and actually set a new record high, surpassing that set in 1981. This happened in April owing to a variety of factors, including the sub-prime crisis in the United States and a sharp rise in inflation. Although the level of interest rates was only handed over to the Bank of England in 1997, it has experienced its busiest period between late 2006 and September 2007, with the rates effectively going up several times to try and combat inflation, which currently stands at 3.1%. This is one of the major reasons why its value is so high on the foreign exchange market at the moment.

Forex brokers have often noted that the Euro and British pound have often mirrored each other’s behaviour on the world stage, moving up and down at virtually the same time. It may therefore come as no surprise that the Euro has also experienced its all time high as of September 2007. Whilst this direct correlation may have made it easier to peg the movements of the currencies, it has led to confusion in the forex markets. With a number of currencies trading at an all time high, it may have put individuals off trading for now. However, as a direct result, the potential is there for investors to cash in if they move when the time is right.

A freelance writer who publishes articles which are of interest to readers. For additional information on Forex Trading, please visit www.lyonsforex.com

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