LONDON (AP) – The British pound is getting caught between the dollar’s surge and the euro’s slump, and its swings are shaking things up for business just as uncertainty grows over a potentially tight general election.
Caught in the crossfire of developments in the United States and the 19-country eurozone, the pound has dropped to a 5-year low against the dollar but pushed to a seven-year high against the euro.
Against the dollar, it is trading below $1.50, its lowest since 2010, largely due to expectations that the Federal Reserve will start raising interest rates this year. Higher rates tend to bolster a currency’s value.
At the same time, the pound has perked up against the euro amid concerns over the eurozone economy that prompted the European Central Bank to launch a 1.1 trillion euro government bond-buying stimulus program. The pound this month rose above 1.40 euros to the highest level against the euro since the end of 2007.
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