Pound rises on currency exchanges

The pound strengthened on foreign currency exchanges today, with the dollar opening notably lower.

Sterling was 0.7 per cent up against the dollar at $1.66.2 by mid-afternoon, following comments from James Bullard, a future member of the Federal Reserve.

Investors' willingness to make riskier investments could also have been increased by comments from the International Monetary Fund (IMF) this morning, providing a supplementary boost to the currency.

Mr Bullard has said that the US government's ongoing purchasing of mortgage-related financial products should be extended past its initial deadline, signalling that more is needed to help the world's largest economy overcome the financial crisis.

Meanwhile, Dominique Strauss-Kahn, head of the IMF, told a UK conference that the worst of the crunch was over but that the global economy remains "highly vulnerable" to a further downturn.

Speaking to news agency Reuters, Lloyds TSB economist Kenneth Broux commented: "Central bank rhetoric on exit strategies remains pivotal for price action across major asset classes."

A strengthening pound can boost the spending power of UK residents abroad, particularly if their salaries and pensions are denominated in sterling.

Posted by Jacob Williams