BLBG:Pound Advances Before Data Forecast to Show U.K. Recession Ended
The pound climbed for a second day versus the dollar before a report economists said will show the U.K. economy pulled out of recession in the third quarter.
Britain’s currency was within 0.2 pence of a one-week high against the euro after Bank of England Deputy Governor Charles Bean said in an interview that the economy is “past its worst.” Gross domestic product expanded 0.6 percent in the three months through September from the previous quarter, according to a Bloomberg survey. The Office for National Statistics will publish the report at 9:30 a.m. London time.
“The GDP report has been rumored as being strong and that boosted sterling,” said Hans Redeker, head of currency strategy at Morgan Stanley in London. “It will be difficult for the pound to beat these positive expectations. Even if we see GDP rebounding today, the U.K. economy is still very weak and the sterling outlook is a weak one.”
The pound advanced 0.2 percent to $1.6073 at 9:10 a.m. London time, after rising 0.5 percent yesterday. It was little changed at 80.94 pence per euro, after reaching 80.78 pence yesterday, the strongest since Oct. 16.
“It’s going to take time, probably several months, but I would like to make people more optimistic about the future,” Bean said in an interview published on the Daily Post newspaper’s website today.
Sterling advanced 0.1 percent in the past three months according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro gained 3.6 percent and the dollar dropped 3.9 percent.
U.K. government bonds fell, with the yield on the 10-year gilt climbing six basis points, or 0.06 percentage point, to 1.91 percent. The 1.75 percent bond maturing in September 2022 fell 0.49, or 4.90 pounds per 1,000-pound face amount, to 98.61.
Gilts have returned 2.4 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bonds gained 2.6 percent and Treasuries earned 1.6 percent.
To contact the reporter on this story: Emma Charlton in London at echarlton1@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
