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U.K. Pound Rises as Data Shows House Prices Gained, Manufacturing Expanded
The pound reached its highest level against the euro in more than a week as a gauge of U.K. house prices unexpectedly rose and a report showed manufacturing expanded for a third month in July.
Sterling advanced against 15 of its 16 most-traded peers, also lifted by speculation that takeovers will result in foreigners buying pounds or British companies repatriating funds from overseas. U.K. government bonds fell as demand held up at a Portuguese debt auction, easing appetite for the safest assets and damping concern that euro-region nations will struggle to fund themselves.
“We got a little bit better housing data,” said John Hydeskov, an analyst at Danske Bank A/S in Copenhagen. “There has also been some talk of M&A flows.”
The pound appreciated 0.6 percent to 82.12 pence against the euro at 5:10 p.m. in London. It earlier reached 82.02 pence, the strongest level since Aug. 31, before the result of the Portuguese debt sale eased pressure on the euro. Against the dollar, sterling rose 1 percent to $1.5506.
U.K. output increased 0.3 percent in July from the previous month, the Office for National Statistics said. That matched the median forecast of 22 economists in a Bloomberg News survey. For the year, it advanced by 4.9 percent.
The average cost of a home rose 0.2 percent in August from the previous month, the second consecutive gain, according to data today from Halifax, the mortgage-lending division of Lloyds Banking Group Plc. Economists forecast a 0.5 percent decline, based on the median of 12 estimates in a Bloomberg survey.
M&A, Bank of England
Dana Petroleum Plc said today it’s worth 18 percent more than Korea National Oil Corp.’s hostile bid for the U.K. company. Vodafone Group Plc, the world’s biggest mobile-phone company, sold a $6.6 billion stake in China Mobile Ltd.
The Bank of England will keep its main interest rate at a record-low 0.50 percent and hold asset purchases at 200 billion pounds ($310 billion), according to the median estimates of analysts in separate Bloomberg surveys. The central bank will announce its interest-rate decision tomorrow.
U.K. government bonds fell, pushing the yield on the 10- year gilt up 7 basis points to 2.99 percent. The 4.75 percent security due March 2020 fell 0.6, or 6 pounds per 1,000-pound face amount, to 114.46. Two-year yields climbed 1 basis point to 0.66 percent.
To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net; Stephen Morris in London at smorris39@bloomberg.net.
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