The U.K. pound rose to the highest level in a month against the dollar as stocks rallied across Europe on optimism U.S. plans to revive its economy will work. The pound also snapped two days of losses versus the euro as the FTSE 100 Index climbed almost 2 percent, led by Barclays Plc and Lloyds Banking Group Plc, boosting demand for riskier assets. The Obama administration is scheduled to announce details of a plan today to expand the $700 billion rescue of the financial system. “The market is taking a bit of risk on and the pound is being dragged along,” said Lauren Rosborough, a currency strategist in London at Westpac Banking Corp. “The market is somewhat short sterling.” The pound rose as much as 1.1 percent to $1.4626, the highest level since Feb. 23, and was at $1.4540 by 9:34 a.m. in London. It was at 93.90 pence per euro, from 93.89 on March 20, after slipping to as low as 94.33 pence. The U.K. currency may resume its decline against the dollar in the medium term as the global economy deteriorates, Rosborough said, without giving a specific forecast. U.K. bonds fell, pushing the yield on the 10-year gilt four basis points higher to 3.07 percent. The 4.5 percent security due in March 2019 slipped 0.35, or 3.5 pounds per 1,000-pound face amount, to 111.22. The yield on the two-year note increased two basis points to 1.36 percent.

Source