It really is incredible how one man’s words, no matter how unsubstantiated in actual economic data, can affect whole markets. This morning, Mervyn King said: ‘We’re certainly not looking to push sterling down. We are moving to a properly valued exchange rate. I think we’re probably there.’
And in response, the pound rose 0.3% against the dollar to $1.51, and 0.1% against the euro to 1.16 euros, halting the decline it has suffered in recent weeks.
Quoth King: ‘I think that during the course of 2013 we will see the recovery come into sight. If you take away what happened in the North Sea oil production and in construction, the UK economy last year grew by 1.5%’ He also said ‘there is momentum behind the recovery that’s coming.’
This is unusually positive even for the Wizard of Threadneedle Street.