BLBG:Pound Advances From Six-Week Low Versus Dollar Before BOE Report
The pound rose from a six-week low against the dollar before the Bank of England presents its quarterly report of economic analysis and inflation projections.
The U.K. currency strengthened for the first time in four days against the euro after a report showed British jobless claims fell in April, adding to signs the economy is improving. Barclays Plc and RBC Capital Markets are among banks that see the BOE lowering its inflation projection today and offering a less gloomy outlook for the economy. U.K. government bonds were little changed.
“Growth has come in marginally better than expected so the BOE will have to marginally push up their estimates and at the same time bring down inflation forecasts,” said Chris Turner, head of foreign-exchange strategy at ING Groep NV In London. “We could get a temporary reprieve for sterling acknowledging the better activity data but I don’t think that will last.”
The pound advanced 0.2 percent to $1.5235 at 9:43 a.m. London time after declining to $1.5193, the lowest level since April 4. The U.K. currency gained 0.3 percent to 84.68 pence per euro after depreciating to 85.17 pence yesterday, the weakest since April 25.
Bank of England Governor Mervyn King will release the latest assessment of the economy at 10:30 a.m. London time in his last press conference in the role.
‘Raise Growth’
The Inflation Report will “lower the Bank of England’s inflation forecast in the near term and raise growth a little,” Robert Wood, chief U.K. economist at Berenberg Bank in London, wrote yesterday in a note to clients. “That fillip of good news is unlikely to be accompanied by a wholesale change to the big picture. We expect the BOE to continue to forecast a sub-par recovery. More stimulus is needed and we expect it to be forthcoming.”
Unemployment claims fell 7,300 in April from the previous month, when they dropped 7,000, the Office for National Statistics said. The decline was larger than the median forecast of 3,000 in a Bloomberg survey of economists.
The pound has strengthened 1.8 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar advanced 2.2 percent and the euro appreciated 1 percent.
The benchmark 10-year gilt yielded 1.91 percent. The 1.75 percent bond maturing in September 2022 fell 0.03, or 30 pence per 1,000-pound face amount, to 98.705.
U.K. government bonds handed investors a loss of 1.7 percent this month through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds fell 0.9 percent and Treasuries dropped 1.3 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
