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Reasons behind the rise of British pound

08-10-2010 13:33 BJT

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The value of the British pound is rising fast, after depreciation before the country's general election. The mid-point of the pound against the U.S. dollar has risen by 14 percent compared with the pre-election period. But what exactly has contributed to this recovery? Let's take a look.

CitiGroup says there are two reasons for the fast-rising sterling.

Firstly, the U.S. dollar has started a new round of depreciation against major currencies.

Secondly, the newly elected British government has been making efforts to cut down on the country's huge deficit, easing market fears over the domestic economy.

In addition, Britain's recovering economy has also been propelling the currency hike. In the second quarter, the nation's GDP has grown 1.1 percent, far above a previously forecast 0.6 percent. The country's banking industry has also seen a solid performance in the first half of this year, after pulling through the financial crisis.

But analysts believe there isn't too much room for the pound to rise further, as a pricey sterling will affect the country's exports.

Editor:Xiong Qu |Source: CNTV.CN

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