Presenting the bouncing pound:
(The graph for euro/sterling is similar).
The latest gains, of course, follow the economist get-together at Threadneedle Street on Tuesday. Bank of England directors (reportedly) told City economists that they had no immediate plans to change the rate paid to commercial banks on sums deposited overnight.
A surprisingly strong consumer survey has helped undo some of the recent damage to sterling, caused when BoE governor, Mervyn King, last week told The Journal newspaper that the pound’s fall would help rebalance the British economy towards more export-driven economic growth.
Now, those comments were interpreted by the market as an attempt to talk sterling down, something which has irritated the BoE, according to the Times:
The seminar — attended by Charles Bean, the Bank’s Deputy Governor for monetary policy, Spencer Dale, its chief economist, and Paul Fisher, its executive director for markets — was organised to give economists more information on the Bank’s £175 billion asset purchase scheme. The economists are also understood to have been told at the meeting that the Bank was unhappy about the way in which the market had reacted to comments made by Mr King to The Journal, the Newcastle title, last week, which were interpreted by some as an attempt to talk down the pound.
Naughty markets. When will they learn to behave?
Probably when there aren’t so many conflicting messages.