BLBG:Pound Set for Weekly Gain as Stock Market Declines Boost Demand for Safety
The pound was headed for a weekly gain versus all 16 of its major peers tracked by Bloomberg as stocks slumped worldwide, boosting demand for the perceived safety of the British currency.
Sterling was little changed against the dollar and euro today as traders awaited a report that economists said will show U.K. public sector borrowing probably fell to 200 million pounds in July, from 12 billion pounds the previous month, according to a Bloomberg survey. The MSCI Asia Pacific Index of shares fell 2.6 percent, set to erase all its gains since the start of 2010, on concern the global economy is slowing.
The pound traded at $1.6498 at 8:17 a.m. in London, from $1.6516 yesterday, and $1.6278 on Aug. 12. It was at 86.65 pence per euro, from 86.78 pence yesterday and 87.35 pence at the end of last week.
Sterling has strengthened 1.4 percent in the past five days against a basket of nine other developed-market currencies tracked by Bloomberg Correlation-Weighted Currency Indexes.
U.K. government bonds were little changed, with the yield on the 10-year gilt at 2.32 percent and that on the two-year note at 0.58 percent.
Ten-year gilt yields fell to a record yesterday as evidence that the U.K. and global economies are slowing caused equity markets around the world to slump, boosting demand for the safest assets. Morgan Stanley cut its forecast for global growth this year and U.S. data showed initial jobless claims unexpectedly rose while Philadelphia-area manufacturing shrank the most in two years.
The global economy will likely grow 3.9 percent this year, down from an earlier estimate of 4.2 percent, Morgan Stanley said in an e-mailed report yesterday. U.K. retail sales including fuel rose 0.2 percent from June, less than the 0.3 percent median estimate in a Bloomberg survey, the Office for National Statistics reported.
To contact the reporter on this story: Garth Theunissen in London gtheunissen@bloomberg.net; Ed Ballard in London at eballard2@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
