Sterling currency exchange rate reaches 5-month high

The currency exchange rate between sterling and the US dollar has reached a five-month high.

Following somewhat cautious comments from the Bank of England governor Mervyn King, there has been concern among investors that the pound would drop.

Mr King said that the UK economy still contains risks and monetary policy could go up or down.

However, Michael Hewson at CMC Markets explained to Reuters that the pound is still seen as attractive.

"People are more comfortable holding sterling because the economic data out of the UK has been much more positive than the data we've seen out of the US," he said.

"On the last few occasions when King has spoken it has sent the pound lower, but this time it didn't, which tells you the market is happy being long of sterling."

Sterling was trading against the dollar at $1.56 this morning (July 29th) at 08:00 BST.

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Posted by Thomas Smith