BLBG:Pound Weakens Versus Dollar Before Manufacturing Orders Report
The pound fell toward a two-week low against the dollar before an industry report that economists said will show an index of U.K. manufacturing orders contracted for a 20th month.
Sterling weakened even as Britain’s budget deficit narrowed more than economists forecast in March as capital investment declined. A government report on Thursday is forecast to show Britain only narrowly avoided a third recession in five years. U.K. government bonds rose.
“The market expects a slight improvement in U.K. data today but we don’t think that will change the bigger picture of the country’s economic outlook,” said Roberto Mialich, a senior currency strategist at UniCredit SpA in Milan. “The pound is likely to remain under pressure and we see any rebound as an opportunity to sell.”
The pound weakened 0.5 percent to $1.5217 at 9:52 a.m. in London after sliding to $1.5204 yesterday, the lowest level since April 5. The U.K. currency was little changed at 85.32 pence per euro.
The Confederation of British Industry will say its index of manufacturing orders was minus 13 in April from minus 15 in March, according to a Bloomberg survey before today’s report.
The budget deficit excluding temporary support for banks was 15.1 billion pounds compared with 16.7 billion pounds a year earlier, the Office for National Statistics said in London.
Sterling has declined 3.6 percent this year, the second- worst performer after the yen among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 3.6 percent and the euro rose 1.8 percent.
The 10-year gilt yield declined two basis points, or 0.02 percentage point, to 1.63 percent after falling to 1.62 percent, the lowest since Sept. 5. The 1.75 percent bond maturing in September 2022 gained 0.2, or 2 pounds per 1,000-pound face amount, to 101.05.
U.K. gilts returned 1.9 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bonds gained 0.9 percent and Treasuries rose 0.8 percent.
To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
