The pound hit a thirteen month high against the U.S. dollar of $1.63, as the U.S. Federal Reserve Chairman, Ben Bernanke, said yesterday that that the bank would keep rates “exceptionally low” for an “extended period”. He also said the Fed would be ready to increase the programme of quantitative easing (where the Fed buys bonds) if necessary in order to maintain economic growth. The news helped to move U.S. stocks into positive territory, as the period of "easy money" looks like continuing for some time yet.
A further weakening in the U.S. dollar means that commodities, which are priced in dollars, will continue to rise, adding to inflationary pressures.
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