BLBG:Pound Declines Against Dollar After Biggest Jump in Three Years
The pound weakened for a second day against the dollar after jumping the most in more than three years last week to the strongest since February.
The U.K. currency also declined for a second session against the euro before a report tomorrow that economists said will show manufacturing production slipped for the first time in three months in April. U.K. 10-year bond yields climbed to the highest level in three months before the nation is scheduled to sell 6 billion pounds ($9.32 billion) of gilts maturing in 2023 and 2032 at auctions starting tomorrow.
“There might be some underlying caution about going full steam ahead on sterling,” said Simon Smith, chief economist at FxPro Group Ltd. in London. “Last week was dominated by the dollar, and there weren’t very many independent winds behind the pound. We might get a little bit of a reversal of what we saw last week, keeping sterling off the highs it reached then.”
The pound fell 0.2 percent to $1.5530 at 10:47 a.m. London time after strengthening 2.4 percent last week, the biggest weekly gain since October 2009. Sterling climbed to $1.5684 on June 6, the highest since Feb. 13. The U.K. currency fell 0.2 percent to 85.12 pence per euro.
British manufacturing shrank 0.2 percent in April after expanding 1.1 percent the previous month, according to a Bloomberg News survey before the Office for National Statistics releases the figures tomorrow. A separate report will show industrial production stalled, after increasing 0.7 percent in March, according to another Bloomberg survey.
Sterling’s Gain
Sterling has appreciated 5.2 percent in the past three months, the best performer of 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 0.7 percent and the euro rose 2.5 percent.
The 10-year gilt yield was little changed at 2.07 percent after rising to 2.08 percent, the highest since Feb. 25. The price of the 1.75 percent security maturing in September 2022 was 97.295.
Gilts handed investors a loss of 1.5 percent this year through June 7, according to Bloomberg World Bond Indexes. German bonds dropped 0.9 percent and U.S. Treasuries declined 1.3 percent.
To contact the reporters on this story: Lucy Meakin in London at lmeakin1@bloomberg.net; David Goodman in London at dgoodman28@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
