Lamont talks up sterling

The Chancellor of the Exchequer and the incoming Governor of the Bank of England helped to pull the pound up from a record trading low yesterday by ruling out further cuts in interest rates for the time being, writes Robert Chote.

The pound had dropped below DM2.33 in early trading, but revived on the comments and the sharp fall in January inflation. The pound closed at 76.2 per cent of its 1985 value, up 0.2 points on the day and 0.5 on the day's low. But many dealers believe the drop in inflation has removed a key obstacle to lower rates. Avinash Persaud, at UBS Phillips & Drew, said another cut could push sterling down to DM2.30.