Sterling buoyed on foreign exchanges

The pound has held on to the sharp gains made against other currencies yesterday (December 1st), in good news for Britons hoping to make international money transfers.

Sterling had risen by a further 0.5 per cent against the dollar to $1.668 by mid-afternoon, building on yesterday's high of $1.665.

Investors' views on the UK economy could have become more positive, following comments from the Bank of England chief economist Spencer Dale.

Speaking to Business leaders today, the expert said that Britain was emerging from recession, after enduring six successive quarters of negative growth.

However, Mr Dale also cited the weak pound as one of the principal drivers of growth.

The strengthening of sterling also follows the unexpectedly weak manufacturing data released yesterday.

Official figures showed that the Purchasing Manager's Index, one of the sector's key indicators, fell from 54.1 to 51.8 during October 2009.

Chancellor of the exchequer Alistair Darling is also forecast to revise his economic predictions downwards during next week's Pre-Budget Report.

It is predicted that the chancellor will say UK GDP is on course to contract by 4.75 per cent this year, rather than the government's initial forecast of -3.5 per cent.

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Posted by Tom Papworth