How actions of the central bank might impact exchange rates, Other Management

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How actions of the central bank might impact exchange rates

Problem: Last week the British pound/dollar exchange rate fell to 1.07. While it's now back up some commentators are blaming the volatility of the exchange rate to the conservative governments on-again off-again tax proposals. Others have suggested that the real problem is inconsistent signals coming from the Bank of England. Explain how the actions of the central bank might impact exchange rates.

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