Bank defends Mervyn King.

MERVYN KING is not trying to talk down the pound, say Bank of England sources, who insist that the currency markets have misinterpreted the governor’s comments. The pound dropped below €1.09 and $1.60 on Friday, its lowest for nearly six months and four months respectively. Traders accused the Bank of trying to talk down the pound deliberately. It countered that the bulletin comment was an attempt to explain the fall in sterling that had already occurred since 2007, and was not a suggestion that it should fall further. Similarly, King’s comment was to a Newcastle newspaper that is running a campaign to boost local exports. The fall already recorded would be “helpful” in that effort, he said.