Bloomberg News

Pound Weakens Versus Euro After Services Industry Growth Cools

August 03, 2012

The pound weakened against the euro after a report showed U.K. services growth unexpectedly slowed in July as the economy struggles to emerge from a double-dip recession.

The pound snapped a four-day decline versus the dollar before a U.S. employment report is released. A gauge of U.K. services output based on a survey of purchasing managers fell to 51 from 51.3 in June, Markit Economics and the Chartered Institute of Purchasing and Supply said. The median forecast of 29 economists in a Bloomberg News survey was for 51.6. A reading above 50 indicates growth. The Bank of England left its bond- buying program on hold yesterday. Gilts declined.

The U.K. currency fell 0.1 percent against the euro to 78.62 pence at 10:11 a.m. London time. It rose 0.2 percent to $1.5542.

Sterling yesterday rebounded from a three-week low against the shared currency after European Central Bank President Mario Draghi failed to convince investors policy makers would take the necessary measures to quell the euro-area debt crisis.

U.S. payrolls climbed by 100,000 workers following an 80,000 increase in June, according to the median forecast of economists surveyed by Bloomberg News. The jobless rate was 8.2 percent for a third consecutive month, the figures may show.

The pound has fallen 1.7 percent in the past three months, the fourth-worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes.

Bonds Fall

Benchmark 10-year yields rose three basis points, or 0.03 percentage point, to 1.47 percent, after falling to within three basis points of a record yesterday. The 4 percent bond due March 2022 fell 0.305, or 3.05 pounds per 1,000-pound face amount, to 122.565.

U.K. government debt has returned 15 percent in the past year, indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies showed. German bunds gained 11 percent and U.S. Treasuries returned 7.4 percent.

The British economy will shrink by 0.5 percent this year, forcing Chancellor of the Exchequer George Osborne to miss his budget-deficit target, Niesr, the National Institute of Economic and Social Research, said. The organization previously forecast no change in output this year. A report on July 25 showed the first double-dip recession since the 1970s deepened in the second quarter of this year.

To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net

To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net


American Apparel's Future
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus