Pound recovers

Sterling recovered from record lows against the euro on Tuesday, lifted by broad profit taking in the single European currency, but analysts said a slowing UK economy meant the recovery was unlikely to last long. The euro was pressured across the board by news of further writedowns at Deutsche Bank and UBS, softer-than-expected German retail sales and a retreat in commodity prices.
Its failure to break above key levels of $1.59 and 80 pence on Monday also contributed to the wave of profit taking. But analysts said sterling's gains could prove short-lived, given soft UK fundamentals and expectations for further Bank of England interest rate cuts - in contrast to bets the European Central Bank will remain on hold at least in the near term. By 1346 GMT the euro was down 1 percent 78.80 pence, around a penny below Monday's peak. But the pound underperformed the dollar, down 0.1 percent at $1.9809.