MercoPress. South Atlantic News Agency

British pound ready to break the 2 US dollars benchmark

The British pound hit a 14-year high of 1.9938 against the dollar, with many experts believing it will break through the 2 dollars benchmark in the next few days.

The pound was last equal to 2 US dollars in 1992, after the UK was forced to leave the European Exchange Rate Mechanism. Inflation data to be published in the UK and US on Tuesday could put further upward pressure on the pound, potentially pushing it above 2 US dollars. Sterling has been rising against the dollar as the UK's economic performance contrasts with fears of a US slowdown. With the UK housing market showing little sign of slowing down and inflation well above the government's 2% target, experts predict a further rise in interest rates before too long which would reinforce the British currency. In contrast, the US housing bubble has burst in recent months and weakness in the manufacturing sector means that further rate rises there are seen as unlikely. The practical side of the situation is that it makes life for UK exporters much harder as well as for the tourist industry but it promotes British visitors to the US given their greater buying power. Meanwhile the Japanese yen fell to a record low against the euro after the Group of Seven finance ministers meeting in Washington over the week end failed to single out the currency's weakness. G7 is concerned how the yen's value has been pushed down by carry trades. On Monday the yen fell to 162 to the Euro. Carry trades are transactions in which investors borrow money from countries with low interest rates, such as Japan, to invest in higher-rate economies. But if Japanese interest rates begin rising, it could also cause problems in world markets because so much money is invested in carry trades