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Pound Nears Three-Month High Amid Bets Retail Sales Rebounded

Dec. 20 (Bloomberg) -- The pound approached the strongest level in three months against the dollar before a report that economists said will show retail sales rebounded in November, supporting policy makers’ decision to pause stimulus.

Sterling climbed against most of its 16 major peers. Sales including fuel increased 0.4 percent last month, after sliding 0.8 percent in October, the Office for National Statistics will say today, according to the median forecast of 22 analysts in a Bloomberg News survey. Ten-year gilt yields were within three basis points of the highest level since May.

“It’s definitely showing resilience,” said Lee McDarby, head of dealing on the corporate and institutional treasury desk at Investec Bank Plc in London. “We’ve got retail sales coming up, and if they come out firm enough, we could maybe see cable pushing again toward that $1.63 level,” he said, referring to sterling’s rate against the dollar.

The pound gained 0.1 percent to $1.6267 at 9:08 a.m. London time, after rising to $1.6307 yesterday, the highest since Sept. 21. The U.K. currency appreciated 0.1 percent to 81.30 pence per euro.

Bank of England policy makers voted 8-1 to pause their asset-buying program at 375 billion pounds as risks from the euro-area crisis ease and inflation concerns persist, the minutes of their Dec. 5-6 meeting released yesterday showed.

The pound has gained 1.7 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro declined 1.2 percent and the dollar fell 3.3 percent.

The 10-year gilt yield was little changed at 1.96 percent after rising to 1.99 percent yesterday, the highest since May 10. The 1.75 percent bond due in September 2022 dropped 0.03, or 30 pence per 1,000-pound face amount, to 98.15.

Gilts returned 1.6 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 3.7 percent and Treasuries earned 1.8 percent.

To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net

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

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