BLBG:Pound Declines Against Dollar Before U.K. Manufacturing Report
The pound weakened for the first time in four days against the dollar before a report that economists say will show the majority of U.K. manufacturers are seeing orders decline.
The U.K. currency weakened against 13 of its 16 major counterparts as signs the economy is struggling to recover increases prospects that the central bank will resume asset- purchases under its program of so-called quantitative easing. Gilts were little changed.
“The whole QE thing from the Bank of England is again in the fore of our minds and that could be a negative factor for sterling,” said Jane Foley, a senior currency strategist at Rabobank International in London.
The pound depreciated 0.2 percent to $1.6120 at 10:42 a.m. London time after rising to $1.6172 yesterday, the strongest level since Nov. 1. The currency was little changed at 80.95 pence per euro.
A gauge of manufacturing orders was at minus 15 this month from minus 21 in November, the Confederation of British Industry will say today, according to the median prediction of 11 economists surveyed by Bloomberg.
Britain’s currency has gained 1.2 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro declined 2.1 percent and the dollar fell 2.8 percent.
The 10-year gilt yield fell one basis point, or 0.01 percentage point, to 1.81 percent.
Gilts have returned 2.6 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bonds gained 4.1 percent and U.S. Treasuries earned 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: Paul Dobson at pdobson2@bloomberg.net
