Pounds Declines Against Dollar as U.S. Jobs Data Beats Economist Estimates

The pound posted its biggest weekly drop against the dollar since November as a report showed U.S. employers added more jobs than forecast last month, damping speculation the Federal Reserve will add more stimulus.

The yield on two-year gilts rose for a second week as Greece said it had invoked powers to force investors to accept losses on their holdings of the nation’s bonds as part of a second bailout deal, easing concern the indebted nation will default on its debts. The pound fell against the euro as the British Chambers of Commerce cut its 2012 growth forecast for the U.K. economy.

“With the pound still treading water against the euro we are seeing a bigger impact go through pound-dollar,” said Lee McDarby, head of dealing on the corporate and institutional treasury desk at Investec Bank Plc in London. “The dollar had a very firm end to the week after a slight upside surprise on the non-farm payrolls.”

The pound fell 0.9 percent in the week, the most since the five days ending Nov. 25, to trade at $1.5696 at 3:50 p.m. London time yesterday. Sterling slid 0.3 percent to 83.57 pence per euro.

U.K. retail sales at stores open at least 12 months, measured by value, fell for a second month in February, the British Retail Consortium said on March 6, stoking concern the economic recovery is faltering. The previous day, the Chambers of Commerce, a London-based business lobby, lowered its 2012 growth projection to 0.6 percent from 0.8 percent in December.

BOE Pledge

The U.S. economy created 227,000 jobs last month, Labor Department figures showed yesterday, beating the 210,000 median estimate of economists surveyed by Bloomberg.

The Bank of England maintained a pledge to buy 50 billion pounds of bonds by May under its so-called quantitative easing program and kept its benchmark interest rate at 0.5 percent, as unanimously predicted in separate Bloomberg surveys.

Two-year gilt yields rose five basis points from a week earlier to 0.44 percent and the rate on 10-year gilts was two basis points higher at 2.16 percent.

A report next week will show U.K. jobless claims last month rose by the most since September, according to economist estimates. The nation will sell as much as 2 billion pounds of 4.5 percent gilts due Dec. 2042 on March 15.

Gilts have handed investors a 0.9 percent loss this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. U.S. Treasuries have dropped 0.5 percent and German government bonds have gained 0.3 percent.

Sterling has dropped 1.1 percent in 2012, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar weakened 2.1 percent and the euro fell 0.8 percent.

To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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