Bloomberg News

Pound Weakens for Fifth Day Before Jobless Claims; Gilts Rise

September 14, 2011

Sept. 14 (Bloomberg) -- The pound fell for a fifth day against the dollar before a report that economists said will show U.K. jobless claims increased last month, giving the central bank more reason to boost asset purchases. Gilts rose.

Sterling slid to an eight-month low against the greenback and fell to the weakest since January 2009 versus the yen. Claims for unemployment benefit rose 35,000 from July, when they climbed 37,100, according to a Bloomberg News survey before today’s report. The Bank of England may need to buy as much as 100 billion pounds ($157 billion) of securities in a new round of quantitative easing within three months, policy maker Adam Posen said yesterday.

The pound fell 0.2 percent to $1.5743 at 9:06 a.m. in London, after sliding to $1.5707, the lowest since Jan. 12. The currency dropped 0.5 percent to 120.093 yen, after reaching 120.751. It was little changed at 86.76 pence per euro.

Britain’s currency has depreciated 5.1 percent in the past 12 months against a basket of nine major peers, the second-worst performer after the dollar, which fell 6.4 percent, according to Bloomberg Correlation-Weighted Currency Indexes.

The 10-year gilt yield dropped three basis points to 2.39, and the two-year yield fell two basis points to 0.54 percent.

Gilts have returned 3.3 percent this month, compared with 2.7 percent for German government bonds and 1 percent for U.S. Treasuries, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies.

--Editors: Nicholas Reynolds, Peter Branton

To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net

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


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