Pound Sterling Posts Gains Against EUR & USD Following BoE Governor King?s Positive Comments

Modified: Friday, 15 March 2013 09:49 BST - Written by David Woodsmith

STORY LINK Pound Sterling Posts Gains Against EUR & USD Following BoE Governor King?s Positive Comments

The Pound has consolidated on yesterday’s gains during the overnight session, following comments from Bank of England Governor Mervyn King, who stated that the British economy is on the verge of a recovery. The BoE Governor’s words represented a significant U-turn, as King has consistently delivered negative commentary regarding the state of the UK economy since the credit crisis of 2007/08.

Significantly, the UK central bank’s Governor also stated that he was ‘certainly not looking to push Sterling down’, any further. Again, this came as a volte face following last year’s assertion that Sterling’s gain of 8% during the first half of 2012 as bad news for the Pound. King has, up to this point, been a strong advocate of a weaker Pound in order to boost domestic exporters’ terms of trade, so the about turn carried some weight.

The Pound is trading up against all of the other sixteen most-actively traded currencies as a result of King’s uncharacteristically positive rhetoric of yesterday. The current Pound Euro exchange rate (currency : GBP EUR) stands at 1.1602, while the Pound to US Dollar exchange rate (currency : GBP USD) has edged up to 1.5138 in early trading today – a significant improvement on the rates in the 1.4800s which the pair was trading at as recently as the end of last week.

Cable will be given further direction later today with the release of the latest US CPI inflation numbers. If the February US CPI figures show the expected increase in the rate of domestic price rises in America, then market rumours regarding a scaling down of the Fed’s Quantitative Easing programme might well be on the cards.

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