BLBG:Pound Approaches 4-Week Low Against Euro As Retail Sales Decline
The pound approached a four-week low against the euro after an industry report showed U.K. retail sales dropped for the first time in four months in August.
Sterling declined versus the common currency amid speculation European Central Bank President Mario Draghi will announce details of a bond-purchase plan at a policy meeting this week to help contain the region’s debt crisis. U.K. 10-year government bonds fell.
“The U.K. economy is seeing very poor domestic data generally,” said Peter Kinsella, a foreign-exchange strategist at Commerzbank AG in London. “The market is pinning its hopes on European Central Bank action to save the day and euro- sterling could grind higher from here.”
The pound declined 0.1 percent to 79.32 pence per euro at 9:57 a.m. London time after dropping to 79.56 pence on Aug. 31, the weakest level since Aug. 7. The U.K. currency was little changed at $1.5894.
Retail sales at stores open at least 12 months, measured by value, dropped 0.4 percent from a year earlier, the British Retail Consortium said. The net effect of the London Olympics, which ran from July 27 to Aug. 12, was minimal as lower footfall in the capital was balanced out by a better performance in the rest of Britain, the London-based trade group said.
Draghi told ECB lawmakers he would be comfortable purchasing debt with maturities of up to about three years, Jean-Paul Gauzes, a member of the European Parliament, told reporters yesterday.
The pound has gained 1 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The dollar fell 0.8 percent and the euro rose 1.2 percent.
Gilts Fall
U.K. 10-year yields climbed three basis points, or 0.03 percentage point, to 1.68 percent. The 1.75 percent bond maturing in September 2022 fell 0.305, or 3.05 pounds per 1,000- pound face amount, to 100.61.
Gilts have returned 4 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 3.8 percent and U.S. Treasuries earned 2.7 percent.
To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
