Pound Rises First Time in Four Days as Stocks, Oil Lend Supportby
Sterling pares gains after drop in manufacturing output
Currency is a function of risk appetite, Mizuho's Jones says
The pound rose for the first time in four days against the dollar, supported by a renewed jump in riskier assets including stocks that undermined the yen.
Sterling advanced from its weakest level since June 2014 against the euro. The U.K. currency pared some of its gains as data showed manufacturing production in February fell more than economists forecast. The FTSE 100 Index climbed, set for a second weekly gain while Brent crude headed for its biggest weekly increase in a month.
“The pound remains a solid function of macro risk appetite,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. Higher asset and commodity prices send the pound higher, he said.
The pound climbed 0.5 percent to $1.4122 as of 4:31 p.m. London time, and earlier rose as much as 0.6 percent. It fell 1.5 percent in the previous three days. Sterling strengthened 0.1 percent to 80.83 pence per euro, after reaching 81.17 pence on Thursday, the weakest since June 2014.
One of the U.K. currency’s biggest gains came versus the yen Friday, rising 0.6 percent. The Japanese currency has been the best performer versus the pound this year. Sterling has been weakening before the June 23 referendum on Britain’s European Union membership and concern that a vote to exit will hamper trade and growth.
The pound is gaining amid “strong risk appetite and in particular a relief selloff in the yen after aggravated strength recently,” said John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark. “Pound-yen has been at the epicenter of yen crosses seeing declines lately. So yen relief equals a pound bounce.”