Pound Rises to Three-Week High on Resilient Post-Brexit EconomyBy
Sterling climbs for third day versus euro and dollar
Data continue to show economy is shrugging off EU exit vote
The pound rose to a three-week high as data continued to suggest the U.K. economy is proving resilient to the Brexit vote.
Sterling gained for a third day versus the dollar and euro, its longest winning streak in more than a month, as a report showed consumer credit rose the fastest in almost a decade in July, while business lending also increased. On Tuesday, export orders posted their best performance in two years, showing the U.K. currency’s decline since the June 23 vote to leave the European Union is helping manufacturers.
“So far, things in Britain haven’t been as bad as people expected”, said Marshall Gittler, head of investment research at FXPRIMUS Europe in Limassol, Cyprus. “With speculative shorts at a record high, it was only natural that some would close out their positions.”
The pound rose 0.3 percent to $1.3232 as of 4:27 p.m. in London, having earlier climbed to $1.3273, the highest since Aug. 4. It strengthened 0.8 percent to 84.98 pence per euro.
Sterling is still the worst performer among major currencies since the referendum, tumbling 11 percent versus the dollar. Hedge funds and other large speculators boosted net negative bets on the currency to a record in the week ended Aug. 16.
U.K. government securities fell as the Bank of England received a surplus of offers from investors to sell gilts to the central bank in its rebooted quantitative-easing program Wednesday. The BOE bought 1.17 billion pounds of bonds due in seven to 15 years, meeting its weekly target. Most were acquired at a discount to the market price.
Benchmark 10-year gilt yields rose two basis points, or 0.02 percentage point, to 0.57 percent. The 2 percent bond due in September 2025 fell 0.21, or 2.10 pounds per 1,000-pound face amount, to 112.615.