Wednesday, February 3, 2010
Exchange Rate Woes
The pound fell again yesterday and today after some more statistics were released, and in anticipation of the next Bank of England Monetary Policy Comittee meeting, according to Reuters.
The article discusses the factors that caused the pound to lose value: Lack of confidence in the UK economy. If investors do not believe the UK is about to pick up, there are probably better places for them to put their money - notably other industrialised nations that are growing much faster than the UK is. More growth means more opportunity to make returns on assets. We discussed a number of these factors in our lectures in week 3 on the exchange rate.