Sterling -- a call for calm

Continued dollar weakness saw cable surge by more than 10% between early November to its recent highs of just below 1.86 on January 23. Although it has fallen back from its recent highs, the move still looks excessive given imbalances in the UK economy and the likelihood of only modest further interest rate increases.

Historically, there has been a reasonably good relationship between cable and the interest rate spread between the UK and the US. Since the beginning of 2002, we have seen the

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