BLBG:Pound Approaches 7-Week High Versus Dollar After Carney Comments
The pound approached a seven-week high against the dollar after Bank of England Governor Mark Carney reiterated policy makers’ commitment to meeting their 2 percent inflation target.
Sterling was about 0.4 percent from its strongest level in a month versus the euro. The central bank yesterday raised the growth forecasts in its Inflation Report and pledged to keep its stance accommodative until the jobless rate falls to 7 percent. The U.K. currency gained versus all 16 of its major peers this month as reports showed manufacturing, house prices and industrial production improved, damping speculation the central bank will add stimulus.
“Carney has emphasized that inflation is the primary target,” said Thu Lan Nguyen, a currency strategist at Commerzbank AG in Frankfurt. “The market now that it has more clarity about monetary policy, it can factor in the recently better-than-expected economic data from the U.K.”
The pound gained 0.1 percent to $1.5511 at 12:06 p.m. London time after rising to $1.5531 yesterday, the highest level since June 21. Sterling was little changed at 86.13 pence per euro after appreciating to 85.79 pence yesterday, the strongest since July 10.
Carney said today on BBC Radio 4’s “Today” program that bringing inflation to 2 percent is “without question” the central bank’s target. Britain is “in the very early stages of the recovery from the weakest period on record,” he said.
Growth Quickens
U.K. manufacturing growth accelerated more than analysts forecast in July, Markit Economics and the Chartered Institute of Purchasing and Supply said on Aug. 1. A report by Halifax, the mortgage unit of Lloyds Banking Group Plc, on Aug. 6 showed that home values increased for a sixth month in July, while government data on the same day showed industrial production rebounded in June more than economists predicted.
The pound has risen 1 percent in the past month, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The euro also strengthened 1 percent, while the dollar slid 3.1 percent.
The Debt Management Office sold 1.3 billion pounds of inflation-linked bonds maturing in March 2034 at an average real yield of 0.08 percent, down from 0.126 percent when the U.K. last sold 20-year index-linked securities in September.
The benchmark 10-year gilt yield was little changed at 2.49 percent after rising to 2.56 percent yesterday, the highest since June 25. The price of the 1.75 percent bond maturing in September 2022 was at 93.985.
Gilts have lost investors 3.4 percent this year through yesterday, according to Bloomberg World Bond Indexes. Treasuries dropped 2.6 percent and German bonds declined 1.4 percent.
To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at dobson2@bloomberg.net
