The pound dollar exchange rate is 0.264% higher on the day with 1 GBP = 1.5958 USD. The pound euro exchange rate is 0.176% higher with 1 GBP = 1.1635 EUR. The British Pound rallied against the majority of the major currencies this morning, consolidating above 1.16 versus the Euro and trading close to the 1.60 level against the U.S Dollar, as equities rose and global risk appetite improved," says Adam Solomon, an exchange rate analyst at Tor Fx. From a technical perspective William Moore at RBS says, "the market is caught in quite a defined range between 1.53 and 1.61 and the longer term cycle work implies that this is set to continue until late March when we anticipate Sterling to find some renewed strength. Accelerating inflation has rekindled speculation that the Bank of England will eventually need to lift UK interest rates from 0.5%, particularly since the BoE minutes yesterday revealed that another member voted for an increase in January. That was, however, before the GDP data showed that the UK economy slipped back into negative growth in the fourth quarter and it is unlikely that the VAT increase at the start of the year will helped boost growth. The British Pound also rallied strongly against the Yen, after Japan’s credit rating was cut for the first time in nine years by Standard & Poor’s, as persistent deflation and political stalemate undermine efforts to reduce the nation’s debt levels. The Euro continued to trend higher against the U.S Dollar, erasing an earlier decline this morning, as the French President Nicolas Sarkozy pledged support in defending the single currency.

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