King: Bank won’t drive down pound

Julian Harris
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BANK of England governor Sir Mervyn King spoke out last night to assure the public that he and his colleagues are not aiming to push down the value of sterling.

The pound has sunk from $1.63 at the start of the year to lows of $1.49 this week, yet recovered yesterday to touch close to $1.51.

Sir Mervyn said the UK’s currency is now likely to be “properly valued” and suggested it should not slip much further.

“The fall in the exchange rate earlier this year offset the rise in the exchange rate in the previous year. Basically we’re at the same level we were after the impact of the financial crisis,” Sir Mervyn told ITV.

“It’s not falling further at present. It is broadly stable I think. We’re certainly not looking to push sterling down.”

Some analysts have accused the Bank governor of talking down the pound by indicating that stimulus from loose policy is more important than lowering inflation, as well as hinting that a lower pound would be welcomed.

This summer’s arrival of new Bank chief Mark Carney has also been attributed to the sinking value of sterling.

While sterling recovered yesterday, the value of equities continued to rise.

Strong macro-economic news from the US helped the FTSE 100 to yet another five-year high, closing up 47.91 points, or 0.7 per cent, at 6,529.41.

Across the pond the Dow Jones hit another record high, closing up 0.6 per cent at 14,539.14.