Pound on Best Run in 2016 as Gains Eat Into `Brexit'-Fueled Dropby and
Rises for 4th day versus dollar in longest run since November
U.S. services data signal `downside risk' for payrolls: BTM
The pound rose for a fourth day against the dollar, the longest winning run since November, as the relief rally following last week’s “Brexit”-fueled selloff gathered pace.
Speculation is building that the losses sparked by the prospect of Britain quitting the European Union in a June 23 referendum were overdone. That outweighed signs the U.K. economy is losing momentum. Sterling extended its gain after a U.S. report showed growth in services slowed in February.
“The pound is more volatile and is going to become more volatile as we move closer to the referendum in June,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. The U.S. services report “points to some downside risk” for the Labor Department’s non-farm payrolls data due Friday, he said.
That report will show U.S. employers added fewer than 200,000 jobs for a second straight month in February, economists surveyed by Bloomberg predict. Back in Britain, sterling climbed against the dollar even as an index of U.K. services, which account for about three quarters of the nation’s output, dropped to an almost three-year low.
The pound gained 0.5 percent to $1.4153 as of 4:05 p.m. London time. It was little changed at 77.24 pence per euro, after a five-day advance that was its longest streak in seven months.
Concern the U.K. will leave the world’s biggest single market, together with waning investor expectations of an interest-rate increase, sent the U.K. currency sliding 3.7 percent against the dollar and 2 percent versus the euro last week. Those declines are now easing.
“For now, the currency market seems to believe that cooler heads will prevail and the relentless selling of cable has ceased,” Boris Schlossberg, managing director of foreign-exchange strategy at BK Asset Management in New York, said in a note, referring to the pound-dollar rate.