Is sterling Europe's New Anchor?

The recovery of the pound sterling from the low levels of 1994-1995 has raised speculations about sterling being a rival to the Deutsche Mark. The sterling has fallen from 12 DM to the pound to 2 DM since 1960, and the British inflation rate is 2 3/4 %. Chancellor Kenneth Clarke is inhibited in his interest rate policy for the fear of rising inflation. A possible Labor government of Tony Blair will be more favourable to EMU membership and face up to the undesired currency appreciation and interest rate cuts.