Bullish supporters of the pound have moved to allay fears that the recovery in sterling is going to be de-railed in the coming months.
Nicholas Paler, PropertyWire.co.uk – 29 June 2009
The pound has staged a strong recovery since January, surging against both the dollar and the euro, having previously been oversold against economies in an equally precarious position. It has already climbed from near parity with the euro to around €1.17, while moving from a low of around $1.35 to the mid $1.60 range.
Since the start of June, however, sterling’s has lost its momentum, and data in the last week has caused it to pull back marginally.
A combination of factors have all contributed to make the currency dip: the UK’s poor public finances, Bank of England governor Mervyn King’s warning over the UK’s ‘enormous’ public debt, and a pause for breath following its recent strong gains.
Currency traders and economists alike agree that, accepting the ‘pause for breath’, in the near term there should be more upside to come.
This was in evidence today as the UK absorbed weak money supply growth data to push higher. By 10:49am, the pound was up marginally against the dollar, at $1.6517, and had climbed half a cent against the euro to €1.1787.
