The pound rose against the dollar, reversing an earlier decline, before a U.S. report that economists said will show U.S. consumer prices fell, bolstering the case for the Federal Reserve to support the economy.
Sterling was little changed against the euro and gilts advanced as Spain’s rating was cut three steps by Moody’s Investors Service, supporting demand for haven assets. U.S. consumer prices fell 0.2 percent last month from April, the biggest drop since December 2008, according to the median estimate in a Bloomberg News survey before today’s Labor Department report.
The pound strengthened 0.2 percent to $1.5541 at 12:25 p.m. in London after earlier falling to $1.5473. It was little changed at 80.92 pence per euro.
The yield on 10-year gilts fell one basis point, or 0.01 percentage point, to 1.74 percent.