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.
Related posts:
- The pound fell below $1.60 on Friday, and rising risk aversion has seen it tumble further this morning
- The pound has reversed recent losses against the aussie, supported by rising risk aversion
- Negative UK economic data pushes the pound down against a broadly weakened dollar
- Pound advanced vs a weakened dollar yesterday, supported too by a hold in the UK’s QE programme
- Sterling edged up against a broadly weaker dollar ahead of important central bank announcements
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