BLBG:Pound Set for Weekly Gain Versus Dollar as Home Loans Increase
The pound was set for its first weekly advance in a month against the dollar after a British Bankers Association report showed mortgage approvals rose to a nine-month high in October.
The U.K. currency fell to its weakest level in four weeks against the euro before European finance ministers meet on Nov. 26 to find a way to plug Greece’s budget shortfall. Gilts rose, with 10-year yields paring their first weekly increase since Oct. 19. A report next week will show the U.K. gross domestic product grew 1 percent in the third quarter, confirming an earlier reading, according to the median estimate of 24 economists surveyed by Bloomberg News.
“A lot of the pound strength is it tracking the euro against the dollar, as if you look at pound-euro, sterling is going to finish lower on the week,” said Lee McDarby, head of dealing on the corporate and institutional treasury desk at Investec Bank Plc in London. “The main figure driving the pound recently has been GDP. Revisions are due on Tuesday so if we see an upwards revision then $1.60 could very easily be taken out as a psychological barrier.”
The pound was little changed at $1.5942 at 11:48 a.m. London time, set for a 0.4 percent weekly advance. Sterling fell 0.1 percent to 80.94 pence per euro after touching 81.01 pence, the weakest since Oct. 24.
Mortgage Approvals
Sterling has gained 1 percent this year, according to Bloomberg Correlation-Weighted Indexes which track 10 developed- market currencies. The euro declined 2.3 percent and the dollar dropped 1.8 percent.
U.K. mortgage approvals rose to 33,039 from a revised 31,544 a month earlier. The median estimate of 11 analysts in a Bloomberg News survey was for a 32,000 rise.
Minutes of the Bank of England’s November meeting, released on Nov. 21, showed all but one of nine Monetary Policy Committee members voted to end the 375 billion-pound bond-purchase program.
The 10-year gilt yield fell one basis point, or 0.01 percentage point, to 1.83 percent. The 1.75 percent bond due September 2022 rose 0.11, or 1.10 pounds per 1,000-pound face amount, to 99.25. The rate has climbed 10 basis points this week.
Euro-region finance ministers will meet on Nov. 26 to discuss ways to unlock international loans for Greece and prevent it from dropping out of the shared currency. The nation has been negotiating with euro-area politicians and the International Monetary Fund over the steps needed to qualify for the release of loan installments frozen since June.
Gilts returned 2.6 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 3.4 percent and U.S. Treasuries earned 2.4 percent.
To contact the reporters on this story: David Goodman in London at dgoodman28@bloomberg.net; Anchalee Worrachate in London at aworrachate@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
