Pound’s Strength May Pose Problems

Having the past year’s best-performing major currency may become a burden for the U.K. economy, according to Goldman Sachs Group Inc.

After reaching the highest level since 2008 on July 7, a trade-weighted index of the pound fell for a third day today as a report showed shop prices tumbled by the most since at least 2006 in June. A gauge of inflation expectations dropped to a three-month low, adding to signs the strength of the currency may be impair future growth.

“The currency is up on a trade-weighted basis almost 10 percent in the last year,” Kevin Daly, an economist at Goldman Sachs in London, said in an interview on Bloomberg Television’s “On The Move” with Manus Cranny. “That leads us to expect that while growth will remain strong, it will moderate to some extent as the year goes through.”

Bloomberg

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