Sterling strengthens despite King's dovish comments

Sterling strengthened by 0.91 cents (0.78%) against the euro yesterday to close the day at 1.1777.

• In early trading yesterday the pound strengthened against the euro, as investors speculated that Bank of England Governor Mervyn King would say the UK’s recession is bottoming out in his testimony to the Treasury Committee later that day. When it came, however, King said he was ‘more uncertain now than ever’ about the UK economy, forcing sterling lower in late trading as some traders booked profits from earlier gains.
  
• Elsewhere, investors broadly shrugged off disappointing CBI realised sales data out mid-morning, which showed no change in the pace of decline from May to June. This was in line with analyst expectations, however.
  
• In trading so far today the pound has dipped against the single currency as investors continue to digest yesterday’s announcements, including a downbeat report about the UK’s chances of recovery by the OECD.
  
• There are no major announcements due in the UK or eurozone today.