Edinburgh - The pound climbed to the strongest level in a week against the euro after Greece’s rejection of austerity boosted the allure of relatively stable UK assets.
British government bonds advanced with their US and German peers, sending the 10-year yield dropping to the lowest since June 15. Sterling is the best-performing major currency of the past three months, and is also benefiting from the prospect that data this week from housing to industrial production will confirm the UK economy is gaining momentum.
The pound advanced 0.4 percent to 71.14 pence per euro as of 9.26am London time, having touched 70.56 pence, the strongest level since June 29. It was little changed at $1.5571.
Benchmark 10-year gilt yields fell two basis points, or 0.02 percentage point, to 1.98 percent, after dropping to 1.95 percent. The 5 percent bond due in March 2025 rose 0.23, or 2.30 pounds per 1 000-pound face amount, to 126.52.
The pound has strengthened 5.8 percent in the past three months against a basket of 10 developed-nation currencies, the best performance in the group.
Bank of England policymakers led by Governor Mark Carney will keep interest rates at a record-low 0.5 percent on July 9, according to all 39 economists in a Bloomberg survey. Officials will maintain their asset-purchase program at 375 billion pounds, a separate survey suggests.
Bloomberg