Dollar Hits 26-Year Low Against British Pound
The U.S. dollar skidded to a 26-year low against the British pound sterling – part of its fall across the board yesterday – as worries about the imploding subprime mortgage market and the bursting of the housing bubble raised fears that higher foreign interest rates could fuel a further swoon.
The U.S. Federal Reserve opted to leave U.S. interest rates steady at its policymaking meeting last week. But worries are spiraling that rising rates abroad will make the U.S. dollar even more vulnerable.
The dollar also fell to within half a cent of a record low against the euro, adding to Friday’s heavy losses. Those losses stemmed from disappointing reports on consumer price inflation and personal income and spending.
The Bank of England will likely boost British interest rates Thursday by a quarter percentage point to 5.75 percent – or half a percentage point higher than U.S. rates.
The European Central Bank is also expected to tighten monetary policy in coming months. With the Fed hoping to keep U.S. rates on hold this year, those moves abroad will make the dollar all the more attractive to investors.
Sterling hit a 26-year high versus the dollar at $2.0160.
