BLBG:Pound Strengthens Against Dollar Before Retail Sales; Gilts Little Changed
The pound rose toward a three-week high against the dollar before an industry report economists said will show a decline in retail sales slowed this month.
U.K. 10-year (GUKG10) gilts were little changed, following a five- day gain. The Confederation of British Industry’s gauge of annual sales growth improved to minus 12 in February from minus 22 the previous month, the London-based business lobby will say today, according to a Bloomberg News survey.
The pound appreciated 0.2 percent to $1.5860 at 8:44 a.m. London time after rising to $1.5902 yesterday, the strongest level since Feb. 8. Sterling was little changed at 84.79 pence per euro.
The 10-year gilt yielded 2.03 percent. The 3.75 percent security due September 2021 traded at 114.85.
Gilts have handed investors a 0.7 percent loss this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German government bonds gained 0.2 percent.
Sterling has weakened 1.7 percent in 2012, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar declined 3.9 percent and the euro gained 0.1 percent.
The U.K.’s currency has dropped 1.1 percent against the euro since Feb. 21, the day before Bank of England minutes showed two policy makers voted for a larger increase in asset purchases than agreed at this month’s meeting.
“The sell-off in sterling following the BOE minutes provides an opportunity to buy it against the euro,” Valentin Marinov and Greg Anderson, senior currency strategists at Citigroup Inc., wrote in a note to clients.
The strategists recommended investors buy the pound at 84.73 pence per euro, with a target of 82.50 and stop-loss orders at 85.55. A stop loss is an instruction to exit a trade at a certain level in case a bet goes the wrong way.
Adam Posen and David Miles voted for a 75 billion-pound boost in quantitative easing, instead of the 50 billion pounds supported by the other seven policy makers.
-- Editors: Nicholas Reynolds, Paul Dobson
To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
