BLBG:Pound Rises From 2-Week Low Versus Euro on Europe Sentiment Data
The pound rose from a two-week low against the euro after a European report showed consumer confidence fell, boosting the appeal of U.K. assets as a haven.
Sterling pared its first quarterly drop versus the 17- nation currency since June as Europe’s biggest utility GDF Suez SA offered to pay 6 billion pounds ($9.53 billion) for the shares in International Power Plc (IPR) it doesn’t already own, fueling optimism capital will flow into Britain. The pound fell against the dollar after Nationwide Building Society said U.K. house prices dropped this month. Gilts advanced as investors sought safer assets.
“With the problems in the euro zone it will be difficult for the euro to gain significantly against the pound,” said You-Na Park, a currency strategist at Commerzbank AG in Frankfurt. “They both have a lot of problems and don’t look that good.”
The pound climbed 0.2 percent to 83.64 pence per euro at 12:07 p.m. London time after falling to 83.95 pence yesterday, the weakest level since March 13. The U.K. currency has fallen 0.3 percent versus the euro this year. Sterling fell 0.2 percent to $1.5863, and dropped 1 percent to 130.38 yen.
An index of executive and consumer sentiment in the euro area fell to 94.4 from a revised 94.5 in February, the European Commission said in Brussels. A gauge of sentiment among manufacturers dropped to minus 7.2 from minus 5.7 in February, the report showed.
International Power
International Power’s board said it received an indicative proposal of 390 pence a share for the 30 percent not already owned by GDF. Shares in International Power jumped as much as 6 percent, the biggest gain since July 2010.
“In the past, if there were news regarding M&A, it was always something that was able to move the currency pair,” Commerzbank’s Park said.
The yield on the 10-year gilt declined two basis points to 2.19 percent. The 4 percent bond due March 2022 gained 0.21, or 2.10 pounds per 1,000-pound face amount, to 116.085.
Sterling weakened for a third day versus the dollar as Nationwide said U.K. house prices fell 0.9 percent from a year earlier, the first decline in six months.
Lenders granted fewer loans for homes than economists predicted in February, Bank of England data showed today. Gross domestic product dropped 0.3 percent in the fourth quarter, compared with a previous estimate of 0.2 percent, the Office for National Statistics said yesterday.
‘Poor Tone’
“Disappointing Nationwide house-price data adds to the poor tone” for the pound, said Jane Foley, a senior currency strategist at Rabobank International in London. “We have been stripped of some of the confidence that we entered the New Year with, and we’ll have to see improved economic data to get that confidence back.”
The pound may weaken to 85 pence per euro by year-end, Foley said. Sterling will end 2012 at 83 pence per euro, according to a Bloomberg News survey of analysts.
The U.K. currency is little changed this year according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The euro gained 0.4 percent, and the dollar slid 2.3 percent.
To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
