Pound Climbs For Third Day Versus Dollar On BOE King’s Comments
The Pound advanced for a third day against the Dollar after Bank of England Governor Mervyn King said policy makers aren’t trying to weaken the U.K. currency. King said policy makers aren’t trying to talk down the pound while acknowledging that its drop since before the financial crisis has helped exports. King also said that an economic recovery is “in sight.” On the Pound, the BOE governor said its decline since before the crisis has helped to boost exports and prevent unemployment from rising to a higher level. King said sterling was now “broadly stable” and “at the same level we were after the impact of the financial crisis.”
Meanwhile, EU leaders meeting in Brussels yesterday agreed to a more growth-friendly interpretation of deficit rules, but Germany and others insisted that austerity measures will work if given more time. Three years into the economic crisis and amid rising unemployment and deepening recession in the Eurozone – is being seen as a victory for France and Italy. When asked about the recent Italian election, where the majority of voters cast their ballots for anti-austerity parties, Merkel said that former Italian leader Mario Monti, who introduced a swathe of cuts, had too short a time in office for the changes to have a positive effect. Meanwhile, the summit did not agree any new employment-boosting measures. A separate €6 billion youth employment scheme is a drop in the ocean at a time when youth employment levels in Greece and Spain are over 50 per cent.
On the FX markets, the positive US employment data saw EUR/USD fall to its lowest level in three months to $1.2910 before climbing back above $1.30. Sterling had a better day supported by comments from BoE governor King confirming policy makers are not trying to talk the pound down. GBP/USD climbed above the $1.51 level while GBP/EUR rose to a high of €1.1611.