Pound Rises Versus Euro, Trims Weekly Drop, as Deficit Shrinks

Pound Rises Versus Euro, Trims Weekly Drop, as Deficit Shrinks

The pound rose for the first time in four days against the euro after a report showed Britain’s September budget deficit was the smallest since 2008.
Sterling headed for a fourth weekly drop against the dollar, the longest streak of losses in four months, after Bank of England policy maker David Miles said the U.K. economy is not recovering as well as he had hoped. Gilts are also set for a weekly decline, with 10-year yields touching 1.96 percent yesterday, the highest level in a month.
“The deficit data was a pleasant surprise,” said Philip Rush, an economist at Nomura International Plc in London. “It shows less fiscal slippage.”
The pound strengthened 0.2 percent to 81.25 pence per euro at 11:03 a.m. London time, trimming its weekly decline to 0.8 percent. It was little changed at $1.6054, having dropped 0.1 percent this week.
The U.K. shortfall excluding government support for banks narrowed to 12.8 billion pounds from 13.5 billion pounds a year earlier, the Office for National Statistics said in London today. The median of estimate of 21 economists in a Bloomberg News survey was a deficit of 13.5 billion pounds.
Britain’s public finances have been hit by a recession that has depressed tax revenue and pushed up welfare spending. Today’s figures showed borrowing between April and August was revised down by 6.7 billion pounds, meaning U.K. Chancellor of the Exchequer George Osborne may overshoot his full-year forecast by less than previously thought.