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by Yves Smith and Felix Salmon
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Apr 17 2007 12:00am EDT

£1 = $2

Those of us with a vaguely transatlantic bent have been mentally doubling UK prices (or halving US ones) for some time, but now it's official: the British pound is worth more than $2. British tourists are sending up quiet thanks to the latest UK inflation report, which hit 3.1% in March, outside the Bank of England's target band, making a rate hike very likely. That, and the perenially-popular carry trade:

"The sky's the limit for sterling," Simon Derrick, chief currency strategist at Bank of New York, said in London. "It's a favorite for investors because of the rate differential."...
"Sterling is going to keep on rising," said Steven Bell, who manages GLC Ltd.'s so-called global macro hedge fund. "We have very high interest rates here in the U.K. and an attractive macro background. I think $2.10 is the level that the pound will settle at."

This is also good news for US companies doing a lot of business in the UK – the big financial-services firms spring to mind.

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