THE embattled pound has climbed to a 10-day high against the dollar, after Bank of England Governor Sir Mervyn King wrongfooted financial markets by signalling a view that sterling's tumble had gone far enough.

Sterling, which hit its lowest levels since June 2010 earlier this week by dropping to around the $1.4830 mark, hit an intra-day high of $1.5176 during yesterday's session.

It had by 5pm fallen back to $1.5127, but was nevertheless showing a gain of 0.37 cents on the day.

Sterling has been weighed down by the grim economic picture. The UK economy continues to face strong headwinds from the Coalition Government's austerity programme. It is viewed as in significant danger of recording its third recession since 2008, with a second consecutive quarter of decline in gross domestic product in the opening three months of 2013.

Sir Mervyn told a television news programme on Thursday: "We're certainly not looking to push sterling down. We are moving to a properly valued exchange rate. I think we're probably there."

His comments caught foreign exchange traders on the hop, given signals from the Bank of England that it was not unhappy with the pound's fall. A weaker pound would boost UK exporters' competitiveness in overseas markets, but might also push up inflation.

Michael Hewson, senior market analyst at CMC Markets UK, cited a belief that Sir Mervyn and other policymakers had "grown concerned that the recent fall in sterling could turn into a rout, given the recent talk of negative interest rates, flexible inflation mandates and other potential policy initiatives".