Pound Jumps to 2007 High Against Euro as Greece Crisis Worsens

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The pound surged to its strongest level against the euro since 2007 as the crisis in Greece intensified.

Sterling’s third day of gains versus its European counterpart extended a three-week advance. Greece shut its banks and imposed capital controls to prevent money fleeing its financial system, after Prime Minister Alexis Tsipras broke off bailout negotiations late Friday, moving the country closer to leaving the currency bloc.

“Greece will dominate market price action during the course of the week,” strategists at Societe Generale SA including London-based Alvin T. Tan wrote in a note on Monday.

The pound advanced 0.3 percent to 70.70 pence per euro as of 1:55 p.m. London time, after appreciating to 69.89, the strongest level since Nov. 12, 2007. It fell 0.1 percent to $1.5732.

Investors with short positions on the euro versus the dollar and pound -- or bets the single currency will weaken -- should maintain those positions, the SocGen analysts wrote.

Sterling rose 2.6 percent versus a basket of 10 major currencies tracked by Bloomberg Correlation-Weighted Indexes in the past month, the biggest gain in the group. It’s been supported by signs Britain’s economic recovery is gathering pace.

U.K. government bonds climbed, pushing 10-year yields to the lowest in more than a week.

Benchmark 10-year gilt yields fell 11 basis points, or 0.11 percentage point, to 2.08 percent after touching 2.02 percent, the lowest since June 19. The 5 percent bond due in March 2025 added 1.085, or 10.85 pounds per 1,000-pound face amount, to 125.53.

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