Page last updated at 14:57 GMT, Tuesday, 27 January 2009

Pound bounces back above $1.40


The pound has rallied slightly against the dollar, pushing back above $1.40, as UK banking shares continue to rise.

Sterling was up more than one-and-half cents against the US dollar at $1.4094, having touched 24-year lows last week near $1.35.

Confidence in the pound rose after Barclays said on Monday that its annual profits would beat expectations.

Shares in Barclays, Lloyds TSB and Royal Bank of Scotland all rose more than 10% in trading on Tuesday morning.

By mid-afternoon, Lloyds and Barclays had fallen back slightly but were still up more than 5% on the day.

Heavy falls

Bank shares fell heavily last week, sparking fears that another UK High Street bank may have to be nationalised.

This prompted a sell-off in sterling, taking it down to levels not seen since late 1985.

But Barclays' announcement on Monday that it expected gross profits to be more than 5.3bn for 2008 led to the bank's share price surging more than 70% on the day.

They rose a further 10% on Tuesday morning.

"We remain bullish on sterling, citing the tight correlation of sterling with the performance of financials in equity markets," said Hans Redeker at BNP Paribas.

Against the euro, the pound was up two-thirds of a cent at 1.0658 euros.

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