Pound recovers as drop to lowest level in a month entices buyers

London - The pound appreciated against the dollar, recovering from a decline that saw it slide to a one-month low.

Sterling also rose against the euro, after dropping on Friday by the most in six weeks, as Chancellor of the Exchequer Philip Hammond was said to be ready to accept that Britain may have to give up membership of the European Union’s single market after Brexit.

Faster-than-forecast inflation in the US supported the dollar last week.

"I imagine the motivation is that sterling’s probably not going to go much lower today" so traders decided to buy it, said Stuart Bennett, head of Group-of-10 currency strategy in London at Banco Santander.
 
The pound’s "gone down below $1.30 level in Asian trading so as people came in they thought this could be a good level" to buy it, he said.

The pound climbed 0.4% to $1.3052 as of 11:44 a.m. London time, after falling 1.8% on Friday, its biggest drop since July 5. It touched $1.2996 earlier on Monday, the lowest since August 17. The British currency appreciated 0.3% to 85.52 pence per euro.

The pound has shown signs of stabilizing as data signalled that the economy was proving to be more resilient since the June 23 decision to leave the EU than many analysts had predicted, prompting them to reduce wagers that the Bank of England will cut interest rates again this year.

While an improvement in London house prices supported the recovery signs, a report by Lloyds Banking Group showed that business confidence slumped to a four-year low, pointing to longer-term risks.

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