Pound Falls as King Sounds Warning

The British pound fell today after Bank of England Governor Mervyn King said the U.K. economy still faces “profound challenges,” fueling speculation the bank may extend asset purchases as the recession persists.

The pound fell 0.2 percent to $1.6576 as of 1:14 p.m. in London after earlier falling as much as 0.7 percent. Sterling weakened 0.6 percent to 146.82 yen. It slid 0.2 percent to 90.32 pence per euro, headed for a fifth straight loss, the longest streak since Sept. 18.

“On growth they are a bit more upbeat but they still think it is too early to close the door on further easing if it is necessary,” said Henrik Gullberg, a strategist in London at Deutsche Bank AG, the world’s biggest currency trader. The possibility of other asset purchases “has had a negative impact on sterling.”

Bloomberg News

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