The pound has the “potential for recovery” against the euro because concern about Britain’s slump is overdone, according to Dresdner Kleinwort-Commerzbank. “It is becoming increasingly obvious that the scare stories about the economic development in Great Britain are exaggerated,” a team of currency strategists led by Ulrich Leuchtmann in Frankfurt wrote in a report today. “When euro- pound traded around 90-95 pence a considerable amount of risk premium had been priced in.” The pound was at 89 pence per euro as of 1:58 p.m. in London today.

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