By Bo Nielsen Nov. 5 (Bloomberg) -- The pound rose against the dollar after the Bank of England boosted its bond-purchase program by a less-than-forecast 25 billion pounds ($41 billion), adding to evidence the economic recovery is taking hold. The U.K. currency also advanced versus the euro as policy makers increased asset purchases to 200 billion pounds, compared with the 225 billion pounds predicted in a Bloomberg survey. The euro recovered earlier losses after European Central Bank President Jean-Claude Trichet said not all liquidity from stimulus measures will be needed in the future. “The BOE was relatively more hawkish than expected,” said Simon Derrick, the London-based chief currency strategist at Bank of New York Mellon Corp., the world’s biggest custodian of assets. “Can the ECB be more hawkish with an oil price approaching $80 a barrel? Yes they can.” The pound advanced to $1.6615 as of 1:45 p.m. in London, from $1.6554 yesterday and as low as $1.6467 earlier. The U.K. currency appreciated to 150.34 yen, from 150.17. The Bank of England’s Monetary Policy Committee left the nation’s key rate unchanged at 0.5 percent today. The ECB held it’s main refinancing rate at 1 percent. The U.K. central bank “believes that the prospect is for a slow recovery in the level of economic activity, so that a substantial margin of under-utilized resources persists,” it said in a statement. “That will continue to bear down on inflation for some time to come.” Stimulus Withdrawal The euro climbed to $1.4914, from $1.486 yesterday, after Trichet said officials will withdraw some of the emergency liquidity measures introduced to fight the recession. They will be phased out in a “timely and gradual fashion,” he said at a press conference in Frankfurt today. “Not all our liquidity measures will be needed to the same extent as in the past.” New Zealand’s dollar fell as unemployment rose to the most since 2000 and Reserve Bank Governor Alan Bollard said the nation’s recovery will be slower than Australia’s. The jobless rate increased to 6.5 percent from 6 percent in the previous three months, Statistics New Zealand said in Wellington today. The median estimate of seven economists surveyed by Bloomberg News was for 6.4 percent. The so-called kiwi fell to 65.42 yen, from 65.70 yesterday in New York. It dropped 0.1 percent to 72.35 U.S. cents. ‘Not Massively Positive’ U.S. unemployment rose to 9.9 percent last month from 9.8 percent in September, according to the median estimate of economists in a Bloomberg News survey before tomorrow’s Labor Department report. Employers eliminated 175,000 jobs in October after a reduction of 263,000 in September, a separate Bloomberg survey showed. “We will go into the payrolls tomorrow with a slightly more positive attitude toward risk but not massively,” said Derrick. “Can I imagine the dollar coming under a little more pressure? Yes, I can.” The Federal Reserve yesterday repeated its intention to keep interest rates “exceptionally low” for “an extended period” as long as inflation expectations are stable and unemployment fails to decline. Policy makers held the target rate for overnight lending between banks between zero to 0.25 percent. To contact the reporters on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

Source