The pound has held firm in forex trading this morning (October 24th) following calls from the governor of the Bank of England for banks to recapitalise.
Sir Mervyn King stated that unless financial institutions take these steps to own up to their bad debts, the economy will not be able to recover.
He also ruled out suggestions the central bank should try and drive growth by giving the public cash or cancelling the government debt it has bought through quantitative easing.
Sir Mervyn said British banks have "insufficient capital" to safeguard against undeclared losses and the sector needs to drop the "pretence" their debts will be repaid.
He warned the next generation may have to live with the consequences of past excesses for a long time.
"Just as in 2008, there is a deep reluctance to admit the extent of the undercapitalisation," Sir Mervyn remarked.
At 09:50 BST, the pound was firm versus the dollar to £1 buying $1.596 and it advanced by 0.5 per cent against the euro to €1.234.
Find out about the pound and forex trading at City Index.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.