Pound weakens after King's comments

The pound weakened by 0.76 cents (0.65%) against the euro yesterday to close the day at 1.1701.

• In early trading yesterday sterling weakened against the euro after London equity markets turned lower initially.
  
• Bank of England Governor Mervyn King’s dovish assessment on Wednesday also pushed sterling lower mid-morning, after he said the UK’s economic recovery could still be a ‘long, hard slog’ despite more encouraging data recently. This led investors to believe the central bank had no intention of tightening its policy anytime soon.
  
• In addition, the Organisation for Economic Cooperation and Development’s bleak prediction the day before that Britain’s economy would contract 4.3% this year and stagnate in 2010 kept up the downward pressure on sterling.
  
• In trading so far today the pound has dipped slightly lower against the euro as investors continue to digest some important announcements out this week.
  
• There are no major announcements due in the UK or eurozone today.