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British Pound Reaches 14-Year-High vs. US Dollar

The British Pound reached its 14-year-high vs. the US Dollar, Thursday, coming close to $2 a Pound. The British currency has straightened substantially in the past year, influenced by increases in British interest rates, flow of capitol due to mergers and acquisitions, and currency bought by the British Central Bank.

The Pound reached the $1.9580 mark only to return to $1.9556 later on that day. The Pound also reached a 8-year-high vs. the Japanese Yen, reaching 227.49 Yen per British Pound. The pound`s trade vs. the Euro has remained relatively stable 0.6747 Pound per Euro. The Dollar has recently been gaining strength on the Euro but that is expected to change once the European Central Bank raises interest rates next week. Dee Byrne a spokeswoman for The Association of British Travel Agents said the strong Pound encouraged many Christmas shoppers to travel to the US. "People are going to New York to do their Christmas shopping, where they will get much more for their money: It couldn`t have come at a better time," She said.

The last time the Dollar was so weak against the Pound was in 1992, after Britain was forced to leave the European Exchange Rate Mechanism, the system of pegging its currency to those of other European Union members. This mechanism was later replaced by the Euro. After the Pound reached its record price in 1992 it lost 25% of its value in only 3 months, as investors successfully gambled against the Pound. During 2006 the Pound gained 14% on the Dollar. Jean-Claude Trichet, president of the European Central Bank, said Wednesday that he was "absolutely convinced" the British economy would benefit from joining the euro zone.