Piagi reports as the Pound Falls to 6-Month Low Versus Dollar
Rates Page 12.03.2012
The pound dropped to a six-month low versus the dollar amid speculation the Bank of England will revise down its growth forecasts tomorrow, underlining the case for keeping interest rates at a record low.
Britain’s currency fell for a second day against the euro even as a report showed U.K. inflation held at the highest rate since May last month. Consumer prices rose 2.7 percent from a year earlier, the Office for National Statistics said today in London. A separate report showed an index of U.K. house prices fell in January. U.K. government bonds were little changed.
“The inflation numbers we’ve seen today aren’t going to cause the BOE to start tightening,” said Simon Smith, chief economist at FxPro Group Ltd. in London. “The economy’s just too weak for that. The relationship between the data and the currencies has become more complex, we’re not seeing firmer data reducing stimulus expectations. The pound can weaken further.”
The pound fell 0.3 percent to $1.5612 at 11:05 a.m. London time, after touching $1.5573, matching an Aug. 8 low. Sterling depreciated 0.7 percent to 86.22 pence per euro, extending yesterday’s 1.3 percent drop.
U.K. 10-year gilts yielded 2.11 percent. The 1.75 percent security due September 2022 was at 96.9.
Gilts handed investors a loss of 2.2 percent this year through yesterday