The governor of the Bank of England said Tuesday that Britain's recovery from recession is fragile, and that the next few months are likely to be volatile. Governor Mervyn King told a Parliamentary committee that recovery appeared to have stalled in the euro area, Britain's largest export market, and pointed to the world economies large imbalances such as trade and budget deficits. “This nascent recovery is fragile. The tensions that underlay the build up of large world imbalances have not been resolved,” King told the House of Commons Treasury Committee. “And, at home, bank lending to the nonfinancial sector continues to fall.” Sterling fell broadly following King's remarks, with the euro moving to a 12-day high to 0.8824 pence and the pound dropping a cent against the dollar to $1.5421. The market sold sterling because it looks increasingly likely that the Bank of England will increase its 200 billion pounds ($310 billion) economic stimulus program of asset purchases, said Mark Bolsom at Travelex Global Business Payments.
