BLBG:Pound Little Changed on Speculation BOE to Keep Stimulus Target
The pound was little changed against the euro and the dollar amid speculation the Bank of England will tomorrow refrain from extending stimulus measures that tend to devalue the currency.
Sterling earlier fell to a two-week low against the dollar as a report showed U.K. shop-price inflation accelerated last month. Central-bank policy makers will maintain their asset- purchase target at 375 billion pounds ($566 billion), according to economists surveyed by Bloomberg. Minutes of the last two meetings showed three members of the nine-member Monetary Policy Committee voted to boost so-called quantitative easing. Gilts were also little changed.
“We are focused on the Bank of England tomorrow but they are trapped a bit by inflation remaining stubbornly high,” said Simon Smith, chief economist at FxPro Group Ltd. in London. “We’re seeing expectations that King can gain a consensus for more QE being tempered. There seem to be two relatively well entrenched camps at the moment.”
The pound traded at $1.5108 at 10:37 a.m. London time after falling to $1.5076, the lowest level since March 20. The U.K. currency dropped 0.1 percent to 84.92 pence per euro.
Smith said he doesn’t expect an expansion in quantitative easing tomorrow.
The Chartered Institute of Purchasing and Supply said its index of construction activity increased to 47.2 last month from 46.8 in February. A reading below 50 indicates contraction.
Retail Prices
U.K. retail prices rose 1.4 percent from a year earlier, compared with an increase of 1.1 percent in February, the British Retail Consortium said today. The group said upward pressure isn’t coming from consumers and it noted the pound’s depreciation this year.
The pound has declined 5.2 percent this year, according to Bloomberg Correlation-Weighted Indexes that track 10 developed- nation currencies. The dollar gained 2.9 percent and the euro fell 0.3 percent.
The benchmark 10-year gilt yielded 1.78 percent. The price of the 1.75 percent bond due September 2022 was 99.75.
Gilts returned 0.6 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 0.3 percent, while Treasuries fell 0.1 percent.
To contact the reporters on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; David Goodman in London at dgoodman28@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
