BLBG:Pound Holds Two-Day Advance Versus Dollar Before Fed Decision
The pound held a two-day advance against the dollar amid speculation the Federal Reserve will today announce a third round of bond purchases to stimulate growth in the world’s largest economy.
Sterling rose to a four-month high versus the U.S currency yesterday after a report showed U.K. unemployment fell the most in two years, adding to signs the economy is emerging from recession. The Fed is likely to resume asset purchases, a policy known as quantitative easing, according to almost two-thirds of economists in a Bloomberg survey. The U.K. Debt Management Office will sell 3.5 billion pounds ($5.6 billion) of 10-year gilts today.
The pound was little changed at $1.6108 as of 7:55 a.m. London time, after climbing to $1.6131 yesterday, the strongest level since May 11. Sterling slipped 0.1 percent to 80.17 pence per euro, after dropping to 80.28 pence yesterday, the weakest since July 5.
The pound has gained 0.5 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The dollar fell 2.4 percent and the euro rose 2.7 percent.
The U.K. last sold 10-year gilts on July 12 at an average yield of 1.719 percent, the lowest since 1998, according to data compiled by Bloomberg.
Gilts have returned 2.2 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies, outperforming German bunds, which gained 2.1 percent, and U.S. Treasuries, which earned 1.7 percent.
To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
