The pound gained against the dollar as confidence that an agreement to bail out Ireland’s banks will prevent contagion in European financial markets boosted demand for the U.K. currency over the relative safety of the U.S. Sterling pared an earlier decline versus the euro. Ireland yesterday applied for aid from the European Union and the International Monetary Fund to help fund itself and save its banks, becoming the second euro member to seek a rescue. European and U.S. stock-index futures advanced. “Sterling came under some pressure last week because of the problems in Ireland, but now that there’s seen to a be solution in place, sterling is going to get some benefit,” said Ian Stannard, a senior currency strategist at BNP Paribas SA in London. The pound rose 0.4 percent to 1.6037 at 8:05 a.m. in London. It traded at 85.63 pence against the euro after declining 1.9 percent last week. Stannard expects the pound to appreciate toward $1.61 today. The yield on U.K. government bonds was near the highest since July 29, according to Bloomberg generic data, at 3.38 percent. The yield on a two-year note was at 1.08 percent. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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