If the UK government fails to gain control of spending and interfere with the Bank of England's independence then the pound may lose its 2009 gains against the dollar and the euro. The sterling exchange rate was at a 23-year low in January of this year, but since has been the best performer among the top 10 major industrialized nations. However, the UK is at risk of losing its AAA debt rating as the government's net debt burden nears 100% of its gross domestic product.

The sterling's low this January returned the currency to its real trade-weighted exchange rate of the 1970s. This particular rate could become the sterling's new fair value as the UK becomes a net oil importer and less capable of earning foreign exchange.

Sterling exchange rates are currently at EUR1.1655 and USD1.6304.

The rates quoted above are interbank rates. Client rates may vary according to the volume and timing of the trade.