BLBG:Pound Advances Most in Week Against Dollar Before Bank of England Decision
The pound the most in more than a week against the dollar amid speculation Bank of England policy makers will leave their debt-purchase program on hold at a meeting of the Monetary Policy Committee today.
Gilts fell, with 10-year yields rising for the third time in four days. The central bank will maintain a pledge to buy 50 billion pounds ($79 billion) of bonds by May under its so-called quantitative-easing program and keep its benchmark interest rate at a record-low 0.5 percent, according to unanimous responses in separate Bloomberg News surveys of economists. The decision will be announced at midday in London.
“The market is in a wait-and-see mode,” said You-Na Park, a foreign-exchange strategist at Commerzbank AG in Frankfurt. “If they do announce no further quantitative easing it might support the pound slightly since this is a relief for the market.”
The British currency climbed 0.5 percent to $1.5822 at 9:56 a.m. London time after rising 0.6 percent, the biggest advance since Feb. 29. It traded little changed at 83.52 pence per euro.
PricewaterhouseCoopers LLP said U.K. gross domestic product will expand 0.6 percent this year as exports, the Olympics and slowing inflation support the recovery in the second half. Still, the U.K. economy faces “significant” growth risks and Chancellor of the Exchequer George Osborne has room to provide a boost to the economy in his budget this month, the London-based consultant company said.
Gilt Yields
Sterling has weakened 0.8 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar declined 2.6 percent, and the euro dropped 0.6 percent.
The 10-year gilt yield was three basis points higher at 2.17 percent. Two-year yields were little changed at 0.44 percent.
The 10-year yield climbed three basis points to 2.23 percent after the central bank raised the ceiling on bond purchases to 325 billion pounds at last month’s meeting.
Gilts have handed investors a 0.8 percent loss this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. U.S. Treasuries have dropped 0.3 percent and German government bonds have gained 0.4 percent.
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
