Pound Goes Up on Outlook for Interest Rates Increase

The Great Britain pound rose today against the U.S. dollar and the euro on the speculation that the planned budget cuts wouldn’t damp the economic growth and after the Bank of England signaled that it might raise the interest rates.
The speculations say that the emergency budget, devised by, the Chancellor of the Exchequer George Osborne, should preserve Britain’s top credit rating without strangling the economic growth. According to the minutes of the recent BOE meeting, the policy maker George Osborne expressed the opinion that the interest rates should be raised. This was surprising announcement as Britain has kept its main interest rate at the record low level of 0.5 percent since March 2009.
The economists say that this unexpected statement helped the pound to retain its strength. However we should consider that this statement was made before the emergency budget was accepted, so it’ll be interesting to see if Sentance would keep this opinion after the severe cuts in the budget spending.
GBP/USD rose to 1.4893 today as of 17:08 GMT from its opening price of 1.4811. EUR/GBP declined to about 0.8223 from the opening level of 0.8282.

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