BLBG:Pound Declines Versus Dollar Before Mortgage-Approvals Report
The pound weakened for the first time in three days against the dollar before a central-bank report that economists said will show U.K. mortgage approvals declined in June.
Sterling dropped from near a five-week high against the greenback after Hometrack Ltd. said U.K. house prices dropped for the first time this year and may extend their decline as a recession curbs demand for homes. The Bank of England will announce its next monetary-policy decision on Aug. 2. U.K. government bonds rose.
The pound fell 0.3 percent to $1.5706 at 8:15 a.m. in London after advancing to $1.5768 on July 27, the strongest level since June 20. The U.K. currency was little changed at 78.23 pence per euro.
Sterling has appreciated 4.6 percent in the past year, the third-best performer behind the yen and the dollar of the 10 developed-market currencies tracked by Bloomberg Correlation- Weighted Indexes. The euro has weakened 7.0 percent.
The 10-year gilt yield climbed two basis points, or 0.02 percentage point, to 1.56 percent after dropping to a record 1.407 percent on July 23. The 4 percent bond maturing in March 2022 declined 0.22, or 2.20 pounds per 1,000-pound face amount, to 121.70.
U.K. government bonds have returned 16 percent in the past year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 11 percent, and Treasuries rose 9 percent.
The Bank of England increased its asset-purchase target by 50 billion pounds to 375 billion pounds and kept its key interest rate at 0.5 percent at its previous meeting held on July 4-5.
U.K. mortgage approvals fell to 48,000 in June from 51,100 in May, according to a Bloomberg survey of economists before today’s report from the Bank of England.
U.K. house prices slipped 0.1 percent from June, when they stagnated, Hometrack said in a report today. A measure of demand fell the most in six months. In London, the pace of home-price inflation slowed to 0.1 percent, the property-research company said in a report.
To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
