BLBG:Pound Advances for Fifth Day as Cameron Sees Economic Recovery
The pound strengthened for a fifth day against the dollar after Prime Minister David Cameron said an improvement in the economy may allow the government to reduce taxes.
The U.K. currency advanced versus 12 of its 16 major counterparts before a report this week that economists said will show Britain’s economy accelerated in the second quarter. Growth in the financial services industry may create more than 250,000 jobs and cause a 2 percent to 3 percent increase in gross domestic product, according to PricewaterhouseCoopers LLP. U.K. government bonds were little changed.
“The data of late has been consistent with a gradually improving backdrop and something of a self-sustaining recovery,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London. “That’s providing a reasonable start to the week from a sterling perspective.”
The pound climbed 0.4 percent to $1.5326 at 11:51 a.m. London time after appreciating to $1.5341, the strongest since June 27. Sterling rose 0.1 percent to 86.01 pence per euro.
After returning to growth in the first quarter, the U.K. economy has shown signs of gathering momentum. Measures of services, manufacturing and construction all improved in June and recent reports have suggested rising house prices and falling unemployment are spurring consumer confidence.
‘Growing Stronger’
“As we start to see the economy grow stronger -- and it is growing stronger -- as we start to see the country improve, actually I want to give people back some of their hard-earned money and try to reduce their taxes,” Cameron said in an interview on BBC Television broadcast yesterday.
GDP increased 0.6 percent in the second quarter, compared with 0.3 percent in the previous three months, according to the median of 37 economist forecasts in a Bloomberg News survey before the Office for National Statistics publishes the figures on July 25.
About 47,000 positions might be added within the financial services industry, while there was potential for 218,000 to be created in the wider economy, PricewaterhouseCoopers said in a report today.
The pound has gained 2.1 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-market currencies. The euro strengthened 2.8 percent and the dollar climbed 1.8 percent.
The 10-year gilt yield was at 2.27 percent after falling to 2.24 percent on July 19, the lowest level since June 20. The price of the 1.75 percent bond due in September 2022 was 95.705.
U.K. government securities handed investors a loss of 2.5 percent this year through July 19, according to Bloomberg World Bond Indexes. German bonds fell 0.6 percent and Treasuries declined 2.2 percent.
To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net; Eshe Nelson in London at enelson32@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
