MPC member's comments rattle sterling

Date: Monday 15 Mar 2010

Comments by Bank of England Monetary Policy Committee Kate Barker over the week-end put a dent in sterling’s value this morning.

The pound fell below $1.51 on Monday morning after hitting a two-week high of $1.5218 on Friday as the market digested Barker’s interview with a regional newspaper in which she suggested that UK gross domestic product (GDP) may suffer a reverse at some point this year.

‘It is possible we will have a quarter when GDP falls, but I don’t think it will be a double dip. I would be surprised if we go back to recession but I think recovery will be bumpy and fragile,’ Barker said in an interview with the Western Morning News.

Economists usually define a recession as two consecutive periods in which GDP declines.

Barker’s comments offset a positive vibe engendered by ratings agency Moody’s which suggested that debt-laden Britain’s triple-AAA credit rating was supported by substantial ‘debt reversibility’.

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