BLBG:Pound Declines to Two-Week Low Versus Dollar as Orders Decline
The pound dropped to a two-week low against the dollar after a U.K. factory index unexpectedly fell this month to the lowest since October 2010.
Sterling declined versus 11 of its 16 major counterparts even as a separate report showed Britain’s budget deficit narrowed more than economists forecast in March. U.K. government bonds gained. The Debt Management Office boosted planned debt sales for this year.
The data today “doesn’t change the bigger picture of the country’s economic outlook which is weak,” said Roberto Mialich, a senior currency strategist at UniCredit SpA in Milan. “The pound is likely to remain under pressure and we see any rebound as an opportunity to sell.”
The pound weakened 0.4 percent to $1.5231 at 11:55 a.m. in London after sliding to $1.5197, the lowest level since April 4. The U.K. currency gained 0.2 percent to 85.25 pence per euro.
A gauge of factory orders dropped to minus 25 from minus 15 in March, the London-based Confederation of British Industry said. The median of forecasts in a Bloomberg News survey was for a reading of minus 13. The report also showed that manufacturers have become more confident, with a quarterly optimism index rising to 5 from zero in January.
Sterling has declined 3.7 percent this year, the second- worst performer after the yen among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 3.6 percent and the euro rose 1.8 percent.
Gilts Gain
The 10-year gilt yield declined two basis points, or 0.02 percentage point, to 1.63 percent after falling to 1.623 percent, the lowest since Sept. 5. The 1.75 percent bond maturing in September 2022 gained 0.155, or 1.55 pounds per 1,000-pound face amount, to 101.005.
The U.K. debt agency raised its planned bond sales for the fiscal year started this month by 4.7 billion pounds to 155.7 billion pounds.
U.K. gilts returned 1.9 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bonds gained 0.9 percent and Treasuries rose 0.8 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
