BLBG:Pound Advances After Report Shows Retail Sales Unexpectedly Rose
The pound rose against the euro to the highest level in more than two weeks after U.K. retail sales unexpectedly increased in July, adding to evidence that the economic slump was less pronounced than previously estimated.
Britain’s currency advanced against all its major peers. Sales including auto fuel gained 0.3 percent from June, the Office for National Statistics said today in London. The median forecast of 22 economists in a Bloomberg News survey was for a 0.1 percent decline. Sales in June were revised to a 0.8 percent gain from a 0.1 percent increase. Gilts rose for the first time in four days after a sale of 1.5 billion pounds ($2.4 billion) of 4.5 percent bonds maturing in September 2034.
“Sterling has gone up on the back of the huge surprise in retail sales data,” said Gavin Friend, a markets strategist at National Australia Bank in London. “This is good news, and suggests the economy may not be as weak as we had thought.”
Sterling appreciated 0.2 percent to 78.19 pence per euro at 10:42 a.m. London time, after reaching 78.13 pence, the strongest level since July 31. The pound was little changed at $1.5693. It weakened as much as 0.3 percent before the data.
Britain’s currency has advanced 0.7 percent in the past week, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar climbed 0.3 percent and the euro was little changed.
The 10-year gilt yield fell two basis points to 1.66 percent. The 2034 securities were sold at an average yield of 2.786 percent, the U.K. Debt Management Office said. Investors bid for 1.98 times the amount of securities allotted, it said.
U.K. bonds returned 2.7 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds earned 2.5 percent and U.S. Treasuries rose 1.3 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
