Bloomberg News

Pound Drops Against Dollar as U.K. Service Growth Likely Slowed

July 05, 2011

July 5 (Bloomberg) -- The pound snapped a two-day gain against the dollar before a report that may show U.K. service- industry growth fell in June to the lowest level in four months.

Sterling dropped versus all 16 major peers monitored by Bloomberg, sliding the most against the dollar and the Swiss franc. Services growth declined to 53.5 last month from 53.8 in May, according to the median estimate of 26 economists surveyed by Bloomberg.

“We feel there’s another disappointment to come today, which should aid gilts and short-sterling futures, but weigh on the pound,” Steven Barrow, head of research for Group-of-10 currencies at Standard Bank Plc in London, wrote in a research note today.

The pound weakened 0.5 percent to $1.6001 as of 8:22 a.m. in London. Sterling was little changed at 90.39 pence per euro, from 90.39 pence yesterday. It reached 90.84 pence versus the 17-nation shared currency on July 1, the weakest level since March 2010.

Gilts rose for the second day, with the yield on the 10- year security retreating two basis points to 3.34 percent.

--Editors: Daniel Tilles, Mark McCord

To contact the reporter on this story: Garth Theunissen in London gtheunissen@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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