Pound Climbs From 4-Month Low Versus Euro as Mortgage Deals Rise

Pound Climbs From 4-Month Low Versus Euro as Mortgage Deals Rise

The pound strengthened from a four- month low against the euro after an industry report showed U.K. mortgage approvals rose last month to the highest since April.
Britain’s currency was little changed versus the dollar before data in two days that will probably show the U.K. exited a recession in the third quarter. Gross domestic product increased 0.6 percent, according to a Bloomberg News survey of economists. Gilts advanced as the Debt Management Office was said to begin selling a bond maturing in January 2044 via banks.
“Some of the data has not been too bad and there is potential for sterling outperformance,” said Gavin Friend, a foreign-exchange strategist at National Australia Bank Ltd. in London. “We are all focused on the GDP data. If the number is good tomorrow we will get a good bounce in the pound and we would use that as a selling opportunity.”
The pound gained 0.2 percent to 81.38 pence per euro at 10:12 a.m. London time after depreciating to 81.65 pence yesterday, the weakest level since June 11. Sterling was at $1.6013.
Mortgage approvals rose to 31,175 from 30,683 in August, the British Bankers Association said in a statement today.
Sterling declined 0.6 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro gained 4 percent and the dollar dropped 4.1 percent.
The benchmark 10-year gilt yield fell three basis points, or 0.03 percentage point, to 1.88 percent.
The 3.25 percent security on sale today may price eight basis points above the 4.5 percent 2042 bond due in December, according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak about it. The rate on the 2042 debt dropped two basis points to 3.19 percent.
Gilts have handed investors a return of 1.8 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bonds gained 2.3 percent, while Treasuries earned 1.5 percent