The recent Bank of England interest rate increases and the possibility of further increases this year ensured that the Pound stayed well over the 2 dollar mark and hit a 26 year high of over &dollar2.05. The subprime mortgage market is not helping the US currency either, as fears of more defaults by these higher risk borrowers grows.

With the rate of inflation still higher than the BofE would like many analysts are predicting that there will be further rate hikes in the coming months to try to keep things under control.

The minutes of July's Bank of England monetary policy committee meeting showed that six out of nine members voted to raise rates with the other three wanting to wait a little longer for previous rises to take effect first.

The Euro remains reasonably strong at around €1.48 to the pound and €0.73 to the weakening dollar.

The weak dollar will be good news for tourists travelling to the States where goods such as designer clothes are generally cheaper anyway, but when you get 2 dollars for each of your pounds there will be plenty of bargains to be had. UK shoppers will be glad to hear that the cost of electrical goods is coming down but other goods such as furniture have been increasing.