BLBG:Pound Extends Weekly Gain Versus Dollar as U.K. GDP Accelerates
The pound extended a second weekly advance versus the dollar after a government report showed U.K. economic growth accelerated to its fastest pace in more than three years in the third quarter.
Sterling was little changed against the euro after Bank of England Governor Mark Carney said yesterday the central bank would widen access to money-market operations. Gross domestic product rose 0.8 percent from the previous period, the biggest increase since the second quarter of 2010, the Office for National Statistics said in London. That matched the median estimate of economists in a Bloomberg News survey. U.K. government bonds headed for a weekly advance.
“I would still be a buyer but not as aggressively as a few months ago when the data was unequivocally good,” Steve Barrow, head of Group-of-10 research at Standard Bank Plc in London, said about the pound. “The U.K. GDP data was in line but the breakdown is reasonably good.”
The pound rose 0.1 percent to $1.6216 at 10:21 a.m. London time after climbing to $1.6257 on Oct. 23, the highest since Oct. 1. It has gained 0.3 percent versus the U.S. currency this week. Sterling traded at 85.20 pence per euro after depreciating to 85.55 pence yesterday, the weakest level since Aug. 29.
The Bank of England will expand the range of collateral it accepts in its facilities and offer money for longer periods on cheaper terms, Carney said in a speech in London late yesterday. Officials will also consider making some liquidity tools available to a wider array of institutions, he said.
Gilt Yields
The pound strengthened 3.3 percent in the past three months, making it the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro rose 1.9 percent, while the dollar fell 2.5 percent.
Benchmark 10-year gilts yielded 2.64 percent. The rate fell to 2.59 percent on Oct. 23, the lowest since Aug. 27, and is down eight basis points since the end of last week. The price of the 2.25 percent bond maturing in September 2023 was at 96.65. The two-year gilt yielded 0.45 percent.
U.K. government securities lost 2.4 percent this year through yesterday, according to Bloomberg World Bond Indexes. Treasuries fell 1.9 percent and German securities slid 1.5 percent.
To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
