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Pound Strengthens Before U.K. Inflation Data; Gilts Advance on Euro Woes
The pound gained before data economists forecast will show U.K. inflation accelerated to a three-year high in September.
Gilts rose as investors sought haven assets amid concern Europe’s options for overcoming the debt crisis are narrowing after Germany doused expectations of a breakthrough at this weekend’s summit. Consumer prices in the U.K. rose 4.9 percent from a year earlier, compared with 4.5 percent in August, according to the median of 35 estimates in a Bloomberg News survey. The Bank of England revived its bond-purchase program last week.
“People are gearing up for the inflation report,” said Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “People will assume that it might arrest or stem the hand of the Bank of England in terms of more QE,” boosting the currency.
The pound strengthened 0.3 percent to 86.98 pence per euro at 8:56 a.m. London time. Sterling appreciated 0.2 percent to $1.5770 and was also 0.2 percent higher at 121.154 yen.
The U.K. currency has declined 1 percent in the past six months, according to Bloomberg Correlation-Weighted Indexes, which measure a basket of 10 developed-market currencies.
The 10-year gilt yield slid six basis points, or 0.06 percentage point, to 2.47 percent. The 3.75 percent security maturing September 2021 advanced 0.580, or 5.80 pounds per 1,000-pound ($1,577) face amount, to 111.195. The two-year note yield declined two basis points to 0.58 percent.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.
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