express-The pound rallied strongly yesterday as positive comments by Bank of England governor Sir Mervyn King helped it pull away from two and a half year lows hit earlier in the week.
The-pound-converted-at-1-51-this-week The pound converted at $1.51 this week
Traders were reassured by King’s comments on Thursday night that the pound was “properly valued”
Sterling, which has tumbled by as much as 7 per cent against the dollar and 5 per cent against the euro this year, gained against both.
Traders were reassured by King’s comments on Thursday night that the pound was “properly valued” and that UK recovery “is in sight”.
His signal that the central bank was not seeking to encourage any further fall in the level of the pound helped reverse some of the negative.
The pound nudged up to more than $1.51, against just above $1.48 earlier in the week, and briefly touched ?1.16 against the European single currency before easing back.
Previously the Bank was regarded as keen to lower the value of the pound to help exporters, though that strategy comes with the danger of fuelling inflation by raising the price of imports. Lee McDarby, head of dealing at Investec Corporate Treasury, said King’s comments had left those betting on a drop in the pound “with egg on their faces”.
Morgan Stanley warned the rally did not represent a change in the trend.