BLBG:Pound Slips From Three-Week High Before EU Chiefs Meet on Greece
The pound slipped from a three-week high against the dollar before European finance ministers meet for talks on an updated aid package for Greece, less than a week after failing to reach a deal.
The 10-year gilt yield slid to match the lowest in almost a week after the Institute for Fiscal Studies said Chancellor of the Exchequer George Osborne may have to extend his austerity program by another year to 2018. Sterling was little changed against the euro. The currency advanced against the dollar last week amid bets U.S. lawmakers will forge a deal to avert the so- called fiscal cliff of automatic spending cuts and tax increases.
“For today the pound will just be driven by euro-group chatter this morning and any fiscal-cliff headlines this afternoon as talks start in earnest,” said Christian Lawrence, a London-based currency strategist at Rabobank International.
The U.K. currency slipped 0.1 percent to $1.6008 at 9:55 a.m. London time. It strengthened to $1.6051 on Nov. 23, the most since Nov. 2. The pound traded at 80.98 pence per euro.
Sterling has gained 1.1 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro declined 2.2 percent in the same period.
Greece, facing a sixth year of recession in 2013, has been negotiating with the euro area and International Monetary Fund over the measures needed to qualify for the payment of loan installments frozen since June.
The 10-year gilt yield fell two basis points, or 0.02 percentage point, to 1.83 percent, after sliding to 1.819 percent. That matches the least since Nov. 20. The 1.75 percent bond due in September 2022 rose 0.14, or 1.40 pounds per 1,000- pound face amount, to 99.31.
Gilts returned 2.8 percent this year through Nov. 23, 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 2.3 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
