The pound/US dollar price is slowly rising as investors broadly sell the greenback

Having made early losses, the pound recovered ground in afternoon trading following positive comments from the BoE Deputy Governor, Charles Bean.

  • The pound initially fell against the dollar after consumer prices last month rose 1.1%, down from 1.6% in August according to the Office for National Statistics, which was below the 1.3% prediction.
  • Prime Minister Gordon Brown also said that government had to ensure that the recovery is not going to be derailed, suggesting that stimulus measures would not be removed anytime soon.
  • However, in the afternoon, the pound rebounded strongly, following the words of Deputy Governor Bean who stated in a speech that the British economy has hit rock bottom and the worst fears of earlier in the year are unfounded.
  • In addition there was a substantial return to dollar selling in the market, spurred by persistent expectations for low US interest rates, and investor appetite for high-yielding currencies.
  • Sterling has continued to edge upwards in trading this morning, though unemployment data, which is released at 09:30BST and is forecast to reveal a higher claimant count, could hamper demand.