Pound Rises On Hot Air

The pound rose above 1.51 against the dollar for the first time since early May after new chancellor George Osborne said that the government's austerity budget had full support from G20 leaders at their weekend meeting.

The pound also rose to a 1 1/2 year high of 1.2255 against the euro.

BoE MPC member Andrew Sentance was quoted as saying that UK interest rates now needed to gradually increase, and that the bank now needs to begin "withdrawing slightly some of the monetary stimulus we provided over the last 12-18 months."

Better than expected data on US consumer spending also boosted market sentiment.