The pound rose against the dollar after the number of pending home resales in the U.S. gained the most in more than seven years, fueling investor optimism that the worst of the recession is over and spurring demand for higher-yielding assets. The U.K. currency climbed to the highest level since October versus its U.S. peer and pared losses against the yen after Morgan Stanley, JPMorgan Chase & Co and American Express Co. raised at least $7.7 billion in capital, following the Federal Reserve’s imposed requirements on firms wishing to repay government funds. “Cable is moving on risk and we’re treating it as a prime vehicle to express a rebound view,” said Geoffrey Yu, a foreign exchange strategist in London at UBS AG, the second-largest currency trader. “Any positive news and people will get into it.” The pound strengthened to $1.6544 by 4:20 p.m. in London, the highest level in seven months, from $1.6443 yesterday. It was at 158.70 yen from 158.81 yen, after slipping to 156.89. It weakened to 86.40 pence per euro from 86.11. The index of signed purchase agreements, or pending home resales, rose 6.7 percent in April, following a 3.2 percent increase in March, the National Association of Realtors said today in Washington. The median estimate of 32 economists surveyed by Bloomberg was for a gain of 0.5 percent.

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