Euro gains 0.5% on sterling

STERLING fell almost half a percent against a broadly stronger euro yesterday, a tightening of capital controls on banks offering only brief support given competing interpretations of what it means for interest rates and growth going forward. The defection by several Monetary Policy Committee officials to the camp supporting a rise in base interest rates has given the pound, battered by another round of political uncertainty after this month’s elections, some support in the past week. On the one hand, reinstating the 0.5 percent of risk-weighted assets banks are asked to hold as a buffer against shocks to consumer finances was a sign of confidence in an economy which has looked to be slowing.