Pound Rises Second Day Versus Euro After Service Sector Expands
The pound strengthened for a second day against the euro after a survey showed the U.K. services sector grew more than economists forecast last month.
Sterling advanced versus 12 of its 16 major counterparts as European stocks declined, underpinning the attraction of U.K. assets as a haven from the euro area debt crisis. A gauge of British manufacturing released yesterday also beat the median estimate of economists surveyed by Bloomberg News. U.K. government bonds rose.
“This spurt in the services sector, when put together with manufacturing, shows composite U.K. activity is expanding,” said Gavin Friend, a foreign-exchange strategist at National Australia Bank Ltd. in London. “When compared with contraction in the euro zone, it’s sterling positive,”
The pound appreciated 0.2 percent to 79.10 pence per euro at 5:02 p.m. London time after gaining 0.1 percent yesterday. The U.K. currency was little changed at $1.5885. It earlier appreciated to $1.5910, the highest level since Aug. 23.
An index based on a survey of purchasing managers in the services industry rose to 53.7, according to Markit Economics and the Chartered Institute of Purchasing and Supply. The median estimate in a Bloomberg News survey was for a reading of 51.2. A figure over 50 signals growth.
The Stoxx Europe 600 Index of shares declined 1.1 percent.
The pound has appreciated 1.2 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The dollar fell 0.6 percent, and the euro rose 1 percent.
The benchmark 10-year gilt yields fell two basis points, or 0.02 percentage point, to 1.64 percent, after earlier rising to 1.71 percent, the highest since Aug. 20. The 1.75 percent bond due in September 2022 gained 0.21, or 2.10 pounds per 1,000- pound face amount, to 101.125.
Gilts have returned 4 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 3.8 percent and U.S. Treasuries earned 2.7 percent.
The Bank of England will keep its key interest rate at a record low 0.5 percent and hold its asset purchase target at 375 billion pounds at its monthly policy announcement on Sept. 6, according to separate Bloomberg surveys of economists.
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