BBC
Thursday, November 30, 2006

The pound has hit a 14-year high against the dollar amid speculation that the Bank of England will raise interest rates in the New Year.
In early Thursday trading in Europe, the pound hit $1.956, its highest level against the dollar since 1992.

Interest rate rises are now more likely in early 2007 after the Nationwide said house prices rose strongly in November.

UK interest rates are currently at 5%, after this month's quarter-point rise to help curb inflation.

Dollar weakness

The strong pound is good news for UK shoppers planning to travel to New York or other big US cities to buy their Christmas presents.

However, it is bad news for UK exporters, as it means their products will be more expensive in the US.

While sterling has been boosted by recent UK interest rate rises, the dollar has been hit over the past weeks by poor US economic data.

The pound is now at its highest level since so-called Black Wednesday in September 1992, when it crashed out of the European Exchange Rate Mechanism (ERM) under John Major's Conservative government.