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Pound may reach parity with US dollar

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At the end of September, the British pound nearly reached parity with the US dollar. The sterling plunged to $1.035 and was close to a historical record. Currently, the greenback is extremely strong. Although the pound sterling has managed to recoup some losses, it still may drop to the parity level.

On September 25, one of the world’s most valuable currencies declined dramatically. The British pound crashed to a record low of $1.035 against the US dollar. Then, the pound sterling recovered, but failed to alleviate concerns over its future. Investors fear galloping inflation and a sharp rise in sovereign debt. Some experts believe the Bank of England should act decisively, in particular it should continue raising the key rate aggressively.

“The pound’s crash is showing markets have a lack of confidence in the UK and that its financial strength is under siege”, Sydney strategist at Saxo Capital Markets Jessica Amir said. “The pound is a whisker away from (dollar) parity and the situation is going to only worsen from here”.

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