Pound climbs over DM3

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Anybody who postponed buying their holiday francs last week will get the equivalent of an extra cafe au lait for every pounds 100 they exchange this morning.

In the aftermath of the Bank of England's decision to raise interest rates on Thursday, the third increase in three months, currency traders in the City of London decided a fourth rise was on the way.

As a result they bid the pound higher, sending it soaring on the foreign exchanges yesterday. For the first time in more than six years, the pound was worth three deutschmarks. It gained four pfennigs in value during the day and also climbed 20 centimes against the French franc to reach FF10.20.

This is grim news for industry because it will make British exports more expensive overseas. But British holidaymakers travelling anywhere in Europe will be much better off than last summer. One pound is currently worth about FFr10 compared with FFr8; Lire2,900 compared with L2,400; and 250 rather than 200 Spanish pesetas.

What's more, the building society share windfalls mean that many people will not be short of spending money this year. The final auction of shares in the Woolwich yesterday left them trading at a price of 296.5 pence, making the average handout worth pounds 1,948. The quarter of shareholders who have decided to sell up will get their cheques by the end of the month.

The fourth building society to convert to a bank this year, the Northern Rock, announced yesterday the date of its stock market flotation as 1 October. It is handing out windfalls to 900,000 customers. Every eligible member will get 500 free shares, worth pounds 1,300-pounds 1,475.