BLBG:Pound Rises Third Day Versus Dollar as London House Prices Climb
The pound strengthened for a third day against the dollar after an industry report showed London house prices increased in November.
Sterling extended last week’s advance versus the U.S. currency before the Bank of England publishes minutes of its November policy meeting in two days. The central bank voted to end its current program of asset purchases at 375 billion pounds ($597 billion) at the Nov. 7-8 gathering. London home prices increased 1.2 percent this month, while they dropped 2.6 percent for the nation as a whole, according to Rightmove Plc (RMV), the operator of Britain’s biggest property website.
“Sterling has picked up some safe-haven and property inflows which help to make it resilient,” said Jane Foley, a senior currency strategist at Rabobank International in London. “Our view is that the pound remains vulnerable because of weak U.K. fundamentals, and we are a seller on a rally.”
The pound gained 0.1 percent to $1.5899 at 10:17 a.m. London time after dropping to $1.5829 on Nov. 15, the lowest level since Sept. 5. Sterling fell 0.2 percent to 80.35 pence per euro. It depreciated to 80.65 pence on Nov. 15, the weakest since Oct. 31.
Sterling has gained 1.4 percent this year, the third-best performer after the New Zealand dollar and the Norwegian krone of the 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro declined 2.7 percent and the dollar dropped 1.1 percent.
Gilts Decline
Gilts fell, with the 10-year yield climbing three basis points, or 0.03 percentage point, to 1.76 percent. The 1.75 percent bond due in September 2022 dropped 0.275, or 2.75 pounds per 1,000-pound face amount, to 99.89. The two-year yield rose two basis points to 0.27 percent.
The Debt Management Office plans to sell index-linked bonds maturing in 2044 through banks this week. Bank of America Corp., Deutsche Bank AG, HSBC Holdings Plc and Nomura International Plc were hired to lead the sale, the DMO said. The U.K. will also auction 4.5 billion pounds of five-year notes tomorrow.
Gilts returned 3.5 percent this year through Nov. 16, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 4 percent and U.S. Treasuries rose 2.8 percent.
To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
