BLBG:U.K. Pound Rises Against Euro as German Manufacturing Shrinks
The pound rose against the euro as a report showing German manufacturing shrank and an impasse over Cyprus’s bailout repayments threatened to reignite Europe’s debt crisis, boosting demand for haven assets.
Sterling was 0.2 percent from its strongest level since Feb. 11 versus the shared currency before data that economists said will show U.K. retail sales increased for the first time since September. Sterling gained versus all but two of its 16 major counterparts. The pound rose yesterday as minutes of the Bank of England’s most recent policy meeting showed some officials said increasing bond purchases to stimulate growth may cause an “unwarranted depreciation of sterling.”
“We are seeing a modest pick-up in safe-haven demand for the pound given the renewed uncertainty in Europe,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “The minutes were less dovish than expected, which suggests that further quantitative easing is not imminent.”
The U.K. currency appreciated 0.5 percent to 85.19 pence per euro at 9:26 a.m. London time, after reaching 85.05 pence on March 19, the strongest since Feb. 11. The pound strengthened 0.3 percent to $1.5150.
U.K. sales including fuel rose 0.4 percent in February from January, when they declined 0.6 percent, according to the median forecast of 20 economists in a Bloomberg News survey.
Sterling has tumbled 4.6 percent this year, the second- worst performance after the yen, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The euro gained 0.7 percent.
U.K. 10-year gilt yields were little changed at 1.89 percent. The 1.75 percent security due September 2022 was at 98.80.
Gilts returned 1 percent this month through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 0.4 percent, and Treasuries fell 0.4 percent.
To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
