Foreign currency exchange market is a fluctuating market that sees ups and downs on the same day. A US dollars was a strong currency in the past, but the scenario is changing now. The British pound has increased in strength against dollar and Euro. This has made the currency much stronger which is definitely beneficial for the country. The GBP/USD pair approached 2nd tier uptrend line in the past few months. On an average against all currencies in the past month alone, GBP has gained 3.36% according to a very recent report.

From the start of the year 2009, British pounds sell higher against Euros. Those people in the foreign exchange market who converted their pounds to Euros are now facing a decline in value of their current investment. In the past year, pound was weak against dollars and Euros. Dollars was also very weak in the past year and lost to several foreign currencies. So the investors identified Euro as a strong currency and they started investing in Euros. The positive increase in strength of British pounds has affected investors and reduced their profits.

Great Britain’s BoE, the world’s largest bank has not come into public appearance like US Fed and ECB of Europe. As British pounds have now risen, experts are working on their speculation about GBP. The three central banks of Britain have taken steps to increase the strength of British pounds. They have learnt from their past mistakes and serious measures were taken to recover the economy. Interest rates were lowered to near zero and the banks have taken special actions to recover British pounds. The decision that will be taken by the BoE is closed watched by financial experts and investors.

The increasing trend of British pounds has attracted investors to invest in pound sterling. As a result, the home prices increased by 0.9% in the month of March. The upside potential for GBP/USD is something around 1.4565 now, but a greater mark was experienced on March 24 with 1.4781. The consumer price index (CPI) of UK is seriously considered to know the strength of GBP. In the month of February, the CPI has increased to 0.3%. This is the first increase of CPI after six months.

Even though the index has grown, annual rate of growth is expected to reduce. Inflation is estimated to be 1% to 3% and this anticipated rate is much higher that what was experienced in the past. If the CPI reduces badly more than the forecast, then experts say that GBP will lose its strength and end up with ultra low 0.50% for the whole year. Recently, British pound tumbled to a 18-day low against yen and dollar. Also, there was a 5-day low against Euro as well as Franc. Speculators suggest that pound will slip further against Euro and Franc as the CPI reduced lower than expectations. The government and banks of UK are looking to moderate CPI in the second quarter of the year.