Fears over the parlous state of the public finances may have helped trigger a stampede away from the pound, Bank of England analysis suggested.
Sterling could also have been driven down by worries that the banking crisis has left a 'permanent' dent in UK incomes, making Britain a less attractive market.
The arguments came in an article analysing why sterling proved so vulnerable during the financial crisis, suffering its biggest slump against a basket of currencies since the 1970s.
Read more: http://www.dailymail.co.uk/money/article-1214883/Sterling-ripe-fall-says-Bank-England.html#ixzz0Rj8OR4Th
Weak pound: Sterling suffered in the slump against various currencies - it hasn't done as badly since the 1970s
Having staged something of a recovery earlier this year, the pound on Friday finished down 1 per cent at $1.62 against the dollar and at 1.10 euros, well below levels before the crisis broke.
The Bank's Quarterly Bulletin suggests that a number of long-term factors left sterling ripe for a fall.
In particular, foreign investors may have taken fright at the size of Britain's bombed-out banking sector, which is four times gross domestic product, and the £1.3trillion cost to the taxpayer of bailing it out.
Read more: http://www.dailymail.co.uk/money/article-1214883/Sterling-ripe-fall-says-Bank-England.html#ixzz0Rj8SjCSU
Monday 21 September 2009
Sterling was ripe for a fall, says Bank of England Read more: http://www.dailymail.co.uk/money/article-1214883/Sterling-ripe-fall-says-Bank-England.h
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