"The pound's rise last week to $1.64 is a vote of confidence in Britain as a safe haven. Investors, who have pushed up sterling from $1.54 a year ago, appreciate the government's deficit reduction plan and the Bank of England's support for asset prices through its quantitative easing programme.
But as every country with an appreciating currency knows, there is an ugly flipside. Figures for UK manufacturing show the sector has lost momentum after last year's booming sales. Export growth has slowed dramatically and City experts and IMF policymakers fear that growing imbalances could set off currency and trade wars as countries fight against each other to limit the impact of global forces.
Andrew Wells, chief investment officer for fixed income at fund manager Fidelity International, said recent events in the eurozone and the battle over the debt ceiling in Washington had rattled confidence in world currency markets".............READ MORE
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