BLBG:Pound Weakens for Second Day Versus Dollar After U.K. GDP Report
The pound fell for a second day against the dollar after data showing U.K. economic growth matched analyst estimates damped speculation the Bank of England is moving closer to ending its accommodative policy.
Sterling erased gains versus the euro. The central bank announces its next policy decision on Aug. 1, when Governor Mark Carney will give analysis on using forward guidance. Economists forecast he’ll also maintain present stimulus measures. Benchmark 10-year gilt yields slid from a two-week high.
“The numbers were in line and there are no big surprises,” said Kathleen Brooks, a research director in London at Forex.com, a unit of online currency-trading company Gain Capital Holdings Inc. (GCAP) “The big news is going to be the Bank of England. In our view they are going to keep rates very low for a long time and they want to keep gilt yields subdued. We are going to get a reiteration of that from the Bank of England over the next couple of weeks and that could potentially cap the pound’s gains.”
The pound fell 0.2 percent to $1.5279 at 11:21 a.m. London time after rising as much as 0.5 percent. The U.K. currency weakened 0.1 percent to 86.32 pence per euro. It earlier climbed 0.4 percent to 85.88 pence.
Gross domestic product expanded 0.6 percent in the second quarter after growing 0.3 percent in the previous three months, the Office for National Statistics in London said today. That matched the median estimate of analysts in a Bloomberg survey.
Sterling strengthened 0.6 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The euro gained 3.2 percent and the dollar climbed 1.7 percent.
The benchmark 10-year (GUKG10) yield was at 2.39 percent after rising to 2.43 percent, the highest since July 10. The price of the 1.75 percent security due September 2022 was at 94.75.
Gilts handed investors a loss of 3.2 percent this year through yesterday, according to Bloomberg World Bond Indexes. German securities fell 1.3 percent and U.S. Treasuries declined 2.6 percent.
To contact the reporters on this story: Eshe Nelson in London at enelson32@bloomberg.net; Neal Armstrong in London at narmstrong8@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
