UK recovery sustainability 'remains uncertain'

Uncertainty remains in regard to the UK economy, the governor of the Bank of England said.

Speaking to parliament's Treasury committee, Mervyn King said: "The strength and sustainability of the recovery is highly uncertain."

Following his comments, the pound pared gains against the dollar, the Bloomberg news agency reports.

The foreign exchange rate between the two currencies fell back following the statement, after earlier trading saw gains of some 0.5 per cent.

Mr King added that the key issue facing the Bank of England's Monetary Policy Committee will now be whether or not the recovery will last long enough to keep inflation on track to meet the target level of two per cent.

Early signs of recovery have been noted in a number of sectors in the UK economy, including in the housing market, where prices have recently followed an upward trajectory.

Last week, the Bank of England opted to keep the interest rate unchanged at 0.5 per cent.

Click here to find out how much you can save with HiFX's Foreign Exchange services.

By Linsey Summers