The pound rose for a third day against the dollar and climbed versus the euro as Citigroup Inc. recommended buying Lloyds Banking Group Plc shares, easing concern about government aid needed to bail out lenders. The British currency rose to its highest level against the dollar in more than a week as the FTSE 350 Banks Index gained 13 percent. The prospect of further U.K. bank nationalizations is 'exaggerated,' Citigroup said. Billionaire investor George Soros said today he stopped betting pound's decline. Prime Minister Gordon Brown said in Parliament today the U.K. is entering a 'deep recession' and the government will act to soften the effect, suggesting he may be considering a further fiscal stimulus. The GBP/USD is currently trading at $1.4130 as of 8:45am, GMT.
U.S. Treasury Secretary Timothy Geithner's call for China to loosen restrictions on its currency was criticized by economists and policy makers at the World Economic Forum. Allowing the yuan to strengthen would be 'economic suicide' amid an economic slump, Stephen Roach, Morgan Stanley's Asia Chairman, told a panel in Davos, Switzerland, yesterday. 'I've never seen an economy in recession voluntarily raise their currency. It's horrible advice.' Geithner, who took office this week, said Jan. 22 President Barack Obama believes China is 'manipulating its currency,' suggesting the new administration may take a tougher line with the biggest foreign buyer of U.S. government debt. China's Premier Wen Jiabao said yesterday in Davos he had expressed interest in having 'early contacts' with Obama's administration.
Traders will watch for weekly jobless claims and December durable goods orders later on Thursday, as well as advance fourth-quarter gross domestic product data on Friday, for further clues on the health of the U.S. economy. European Central Bank President Jean- Claude Trichet said the bank's next 'important' meeting will be in March, suggesting policy makers will avoid the interest-rate cut some investors expect next week.