The pound could break the $2 barrier this week, analysts say, if last week’s dollar selling wave continues. The dollar fell sharply on Friday amid fears about the American economy, unsettling financial markets.
The dollar’s fall was felt in a range of markets. The price of crude oil rose in dollar terms as a direct reflection of the American currency’s weakness.
Sterling has strengthened against the beleaguered dollar in spite of the fact that expectations of further British interest-rate rises have faded.
It closed at $1.93 on Friday, its highest for 18 months, even though American interest rates, at 5.25%, are higher than Britain’s 5% rate.
More significantly, the euro climbed above $1.30, hitting its highest level since April 2005.
“The dollar is the big story,” said Nick Stamenkovic, an economist with RIA Capital. “The question is whether it has been exaggerated by thin markets.” American trading was quiet ahead of the Thanksgiving weekend holiday.
Carsten Fritsch, a currency strategist at Commerzbank in Frankfurt, said: “The break of $1.30 is a strong signal that the dollar has to weaken. The sentiment for the dollar is negative. In the eurozone, growth will remain strong.”
Analysts believe that the Federal Reserve will cut interest rates next year in response to economic weakness, undermining the dollar.
Global Insight predicts that the euro will rise to $1.40 during 2007, implying that sterling will break through $2 and stay there.
Notes
set (to) v. 开始认真干，开始
barrier n.屏障，关口
unsettling a.使人不安的，(消息)混乱的
crude oil原油
beleaguer vt.围，围攻
faded vi.(声音等)减弱下去，消失
exaggerated a.夸大的, 言过其实的, 夸张的
thanksgiving holiday感恩节
eurozone n.欧元区
sentiment n.情绪, 观点
Federal Reserve联邦储备银行
undermine v.破坏
Global Insight《全球瞭望》杂志 |
