With the increasing inflationary pressures that the United Kingdom faces, expectation are that the Bank of England will increase interest rates, sooner rather than later, in its efforts to contain inflation. The rise in consumer prices comes at a time, when growth rates remain anemic and business lethargic, in light of the severe austerity pressures, which the government has implemented.
Expectations for a rate hike has strengthened the demand for Sterling, at a time when it is least welcome and which could constrain the possibility of an export driven recovery.
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