Melodika.net: “Sterling Climbs as the US Economy Avoids Fiscal Fall, Says Currencies Direct”
The British Pound hit a 16-month high against the US Dollar yesterday as markets around the world responded positively to the news that the House of Representatives had finally come to a short-term budgetary agreement and averted worries that the US economy would fall off the 'fiscal cliff', comments currency exchange experts, Currencies Direct.
The first trading session of 2013 (Wednesday) saw strong gains across many of the world's major market indices, with London's FTSE 100 having risen by over two percent.
Sterling reached a 16-month high of 1.6381 against the US Dollar at the close of trading in response to the last-minute deal which averted spending cuts and tax hikes worth an estimated $600 billion; and which would have plunged the US economy back deep into recession.
Following lengthy negotiations before a looming New Year's Day deadline, Congress managed to pass the bill early on Tuesday morning.
Despite the news analysts believe the compromise will only provide short-term relief from the threat of austerity, with the House set to convene in February to discuss further budgetary arrangements aimed at proposing $109 billion of spending cuts, a freeze on tax cuts for American's earning less than $400,000 a year, inheritance and capital tax rises and extensions to both unemployment benefits and working tax credits.
If no agreement can be found, the catastrophe of national default could still swamp the economy.
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