Pound Gains Versus Dollar After House-Price Report; Gilts Fall
2012-02-20 12:58:36.564 GMT
By Emma Charlton
Feb. 20 (Bloomberg) -- The pound strengthened for a fourth day against the dollar after an industry report showed U.K.
house prices increased in February, adding to signs the economy is recovering.
Sterling appreciated to a three-month high versus the yen amid speculation minutes of the central bank’s February meeting to be released this week will show less support for additional bond purchases. Gilts dropped for a third day as European officials moved toward agreement on a 130 billion-euro ($172.2
billion) financial aid package for Greece, reducing demand for safer securities.
“There is a little bit of momentum gathering behind the notion that there may not be any more quantitative easing,”
said Jane Foley, a senior currency strategist at Rabobank International in London. “The BOE is on pause in that regard and that’s giving some support to sterling.”
The pound climbed 0.2 percent to $1.5862 at 12:57 p.m.
London time, after rising 0.5 percent last week. Sterling advanced 0.1 percent to 126.04 yen after reaching 126.84 yen, the strongest since Oct. 31. The U.K. currency fell 0.8 percent to 83.67 pence per euro.
Asking prices for London homes rose toward a record in February, helping push national values up the most in almost a decade, Rightmove Plc said. Prices in England and Wales climbed
4.1 percent on the month, the most since April 2002. A separate report from the Council of Mortgage Lenders showed U.K. gross mortgage lending fell 14 percent in January from December. The figure is still up 10 percent from a year earlier.
The pound gained 0.2 percent over the past week, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The currency has weakened 1.2 percent this year.
Bank of England officials increased their target for bond purchases by 50 billion pounds to 325 billion pounds on Feb. 9.
The nine-member Monetary Policy Committee also held its key interest rate at a record-low 0.5 percent.
The central bank will release minutes of this month’s meeting on Feb. 22. Policy makers voted unanimously to raise the asset purchase target to 275 billion pounds from 200 billion pounds in October.
Gilts extended last week’s decline as European finance ministers prepared to meet in Brussels to seek agreement on Greece’s bailout. Talks on the nation’s second aid package in two years will aim to reconcile demands made on Greek politicians, a debt swap among private creditors and the role of the European Central Bank.
The yield on the 10-year gilt climbed three basis points to
2.22 percent. The 3.75 percent bond due in September 2021 fell 0.3, or 3 pounds per 1,000-pound face amount, to 113.115.
Gilts have handed investors a 2.1 percent loss this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German government bonds dropped 0.5 percent.
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--With assistance from Jennifer Ryan and Keith Jenkins in London. Editors: Nicholas Reynolds, Mark McCord