Pound Approaches 3-Month High After Factory Data; Gilts Decline

The pound rose toward a three-month high against the dollar after an industry report showed U.K. manufacturing shrank less than economists forecast, damping speculation the Bank of England will increase monetary stimulus.

The U.K. currency gained versus most of its major counterparts after Markit Economics and the Chartered Institute of Purchasing and Supply said producers of consumer goods increased output last month and a “severe decline” in new orders caused by Europe’s debt turmoil eased. U.K. government bonds fell before the Bank of England meets to review interest rates and asset purchases this week.