BLBG:Pound Climbs, Extending Weekly Advance, as Retail Sales Unexpectedly Rise
The pound rose against the dollar, headed for its fourth weekly advance in the past five, after U.K. retail sales unexpectedly increased in January, fueling speculation the economy may dodge a recession.
Sterling strengthened to a more than three-month high against the yen and gilts fell. Sales including fuel climbed 0.9 percent from December, when they rose 0.6 percent, the Office for National Statistics said today. Economists forecast a 0.3 percent drop, according to a Bloomberg News survey.
“The retail sales data helped the pound, it was surprisingly good,” said Steven Barrow, head of Group of 10 research at Standard Bank Plc in London. “The numbers look genuinely good and may be something that helps the momentum of sterling. It makes me a little bit more positive that growth in the first quarter won’t fall, avoiding a technical recession.”
The U.K. currency advanced 0.3 percent to $1.5841 at 10:30 a.m. London time, extending its weekly advance to 0.5 percent. It was 0.1 percent stronger at 83.02 pence per euro, leaving it 0.9 percent higher in the five days. Sterling rose 0.4 percent to 125.26 yen, after climbing to 125.37 the most since Nov. 8.
Bank of England Governor Mervyn King said this week that the U.K. economy should “gradually” recover this year as cooling inflation helps reduce a squeeze on consumers’ finances, even as the European debt crisis weighs on growth. The central bank kept its benchmark interest rate at a record low 0.5 percent and raised its bond purchase target to 325 billion pounds on Feb. 9 to underpin the economy.
Pound Gains
Manufacturing grew in January and expansion in services accelerated, reports this month showed. The data added to signs that Britain may avoid a recession, defined as two consecutive quarters of contraction. Gross domestic product contracted 0.2 percent in the fourth quarter.
Sterling has gained 0.5 percent this week, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies, trimming its decline this year to 0.8 percent.
The yield on the 10-year gilt climbed four basis points to 2.18 percent. The two-year yield increased one basis point to 0.44 percent.
Gilts have lost of 1.8 percent this year, after returning almost 17 percent in 2011, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German debt lost 0.4 percent in 2012, with U.S. Treasuries also down 0.4 percent, the indexes show.
To contact the reporter on this story: Emma Charlton in London at echarlton1@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
