Hail to the mighty pound

摘要

These are halcyon days for the British pound. Between August and early December, sterling soared from $1.54 to $1.68, ¥164 to ¥193, and DM2.28 to DM2.64. Its trade-weighted value (which reflects the pattern of Britain's trade with different countries) was over 14% up on a year earlier. This is heady stuff indeed for a currency which has been falling in value for most of the past 50 years. And it is only four years since sterling was pushed into a withdrawal from Europe's exchange-rate mechanism (ERM) that deeply embarrassed the government. But what happens next to the pound—and with it, the British economy-is now in the balance. Is the strong pound back for good?