BLBG:Pound Declines Against Euro as German Growth Beats Estimate
The pound fell from its strongest level in 3 1/2 years against the euro as a report showed Germany’s economy grew more than analysts forecast in the first quarter, damping demand for the safety of U.K. assets.
Gilts fell as the U.K. prepared to sell as much as 2.75 billion pounds ($4.4 billion) of 5 percent bonds maturing in 2025. European Union finance ministers are to meet in Brussels today amid deepening political paralysis in Greece that threatens the nation’s euro membership. Uncertainty over the euro’s future is damaging the recovery in Britain and Europe, U.K. Chancellor of the Exchequer George Osborne said yesterday.
Sterling slid 0.3 percent to 79.89 pence per euro at 9:08 a.m. London time. It reached 79.63 pence yesterday, the strongest level since November 2008. The pound was little changed at $1.6091. It fell to $1.6052 yesterday, the lowest level since April 20.
Gross domestic product in Europe’s largest economy rose 0.5 percent from the fourth quarter, when it fell 0.2 percent, the Federal Statistics Office said in Wiesbaden today. Economists predicted a 0.1 percent gain, according to the median estimate in a Bloomberg survey of economists.
The 10-year gilt yield climbed two basis points to 1.90 percent. The rate fell to a record low 1.860 percent yesterday. The 4 percent security due March 2022 slid 0.195, or 1.95 pounds per 1,000-pound face amount, to 118.745.
Gilts have gained 0.4 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. U.S. Treasuries rose 1.1 percent and German bunds returned 2.7 percent, the indexes show.
Sterling has appreciated 5.1 percent in the past three months, the best performer of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 2.2 percent and the euro has risen 0.5 percent.
To contact the reporters on this story: David Goodman in London at dgoodman28@bloomberg.net;
To contact the editors responsible for this story: Daniel Tilles at dtilles@bloomberg.net
