BLBG:Pound Heads for Third Weekly Advance as Growth Outlook Improves
The pound headed for a third weekly advance versus the dollar as economic data signaling the U.K. recovery is strengthening boosted demand for the currency.
Sterling was little changed against the euro. Data next week will show U.K. mortgage approvals increased in June to the most in five years, according to economist estimates. The Office for National Statistics said yesterday gross domestic product increased 0.6 percent in the second quarter from 0.3 percent in the first three months. The Bank of England will issue its quarterly Inflation Report on Aug. 7. Gilts rose.
“We know the growth outlook has been improving and that has been confirmed by the initial reading of the second quarter GDP print -- accordingly that’s had a positive impact” on the pound, said Chris Walker, foreign-exchange strategist at Barclays Plc in London. “I’d rather be short pound heading into the Inflation Report,” he said, referring to a bet the currency will weaken.
The pound was little changed at $1.5397 as of 10:54 a.m. London time, set for a 0.9 percent advance this week. The U.K. currency was at 86.27 pence per euro.
Lenders granted 59,500 home loans in June, the most since March 2008, from 58,200 the previous month, a Bank of England report will say on July 29, according to the medium estimate of analysts in a Bloomberg News survey.
Sterling rose 0.6 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The euro added 3.3 percent and the dollar climbed 1.1 percent.
Ten-year gilt yields fell two basis points, or 0.02 percentage point, to 2.35 percent, poised for a seven basis-point increase this week, the biggest gain since the five days ended June 21. The 1.75 percent security due September 2022 rose 0.19, or 1.90 pounds per 1,000-pound face amount, to 95.07.
Gilts handed investors a loss of 3.1 percent this year through yesterday, according to Bloomberg World Bond Indexes. German bunds lost 1.3 percent and U.S. Treasuries declined 2.6 percent.
To contact the reporter on this story: Eshe Nelson in London at enelson32@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
