British Pound Hard Hit by CBI Index Decline
Posted by Edward Dy on April 30th, 2008
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Photo Credit: austinevan
The British pound like all the major currencies such as the Euro has been hit hard by inflation and weaker consumer spending.
The Confederation of British Industry distributive trades survey has hit its lowest ever since November of 1992.
The weaker consumer spending has been blamed on a lot of reasons, among them the Easter holiday and poor weather, but the primary reason why consumers are tightening their belts is the weakening housing market.
Already, conditions are bad enough, but the worse is yet to come. This might force the Bank of England to pare down interest rates once more despite growing inflationary pressures.
However, such a measure, while easing inflationary impact on consumers, may only cause the pound to sink even deeper.
Inflation will most likely hover somewhere around 3 percent target for longer than initially anticipated, said BoE Governor King this morning.
Although not readily apparent, these rather hawkish comments run in conflict with the rapid decline in mortgage approvals and the possibility that in the near future, there will be major layoffs in the UK.
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