TIMESONLINE: Sterling soared today to levels not seen since 1981 as 'risk aversion' to the dollar grew amid US housing market fears
Renewed worries about the crisis descending on the American sub-prime housing market sent the dollar tumbling to 12-year lows on the currency markets and pushed the British pound to its highest level since 1981.
Sterling leaped to $2.05, a 26-year peak, fuelled by renewed expectations of higher UK interest rates after stronger than expected inflation data emerged yesterday.
Set alongside fresh price highs charged by Britain's retailers, it reinforced predictions the Bank of England would increase interest rates to 6 per cent as early as next month. Pound hits $2.05 as dollar struck by US debt woes (more)
Mark Alexander
