Gilts Snap Two-Day Advance Before BOE Publishes Meeting Minutes

U.K. 10-year gilts snapped a two- day advance before the Bank of England publishes minutes on its decision to leave interest rates on hold and keep its asset purchase target at 375 billion pounds ($610 billion).

The pound strengthened against most of 16 major peers tracked by Bloomberg. Sterling approached the strongest in over four months versus the dollar. The U.K. Debt Management Office is scheduled to auction 4.5 billion pounds of gilts due 2017 tomorrow.

The 10-year gilt yield rose two basis points, or 0.02 percentage point, to 1.89 percent at 8:19 a.m. in London after rising to 1.99 percent on Sept. 17, the highest since May 10. The 1.75 percent bond due in September 2022 fell 0.14, or 1.40 pounds per 1,000-pound ($1,626) face amount, to 98.705.

Gilts returned 2.1 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 2.2 percent and U.S. Treasuries earned 1.5 percent.

The pound rose 0.1 percent to $1.6261 after climbing to $1.6271. It advanced to $1.6273 on Sept. 17, the highest level since April 30. Sterling was little changed at 80.32 pence per euro.

The pound has appreciated 0.9 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The dollar fell 3 percent and the euro rose 3.4 percent.

To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net

To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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