BLBG:Pound Falls to Two-Week Low on Debt Crisis Concern; Gilts Gain
The pound fell to the lowest level in almost two weeks against the dollar as concern euro-area leaders are moving too slowly to end the debt crisis damped demand for assets linked to Europe.
U.K. government bonds advanced after demonstrations turned violent yesterday in Madrid and Catalan President Artur Mas said the time had come to seek self-determination. The Confederation of British Industry’s gauge of annual sales growth will climb from a four-month low, analysts said before the report today.
“The U.K. is caught up in euro-zone gridlock,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “The market is buying the dollar, selling the euro and selling the pound.”
The pound weakened 0.1 percent to $1.6167 at 8:30 a.m. London time after dropping to $1.6150, the lowest level since Sept. 14. The U.K. currency appreciated 0.1 percent to 79.61 pence per euro.
Sterling has strengthened 2 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro tumbled 3.2 percent and the dollar weakened 2.4 percent.
The 10-year gilt yield fell six basis points, or 0.06 percentage point, to 1.76 percent after dropping to 1.75 percent, the lowest since Sept. 12. The 1.75 percent bond due in September 2022 gained 0.55, or 5.50 pounds per 1,000-pound face amount, to 99.925.
Gilts returned 2.5 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 2.4 percent and U.S. Treasuries rose 2.1 percent.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
