Pound near nine-week high versus euro
The pound traded near its strongest in nine weeks against the euro on mounting concern that Ireland’s bailout will fail to stem the euro region’s sovereign debt crisis.
Sterling snapped a four-day losing streak against the dollar. Investors favored the pound over the euro as Spanish and Portuguese bonds declined on speculation the nations will have to follow Ireland and Greece in asking for European Union assistance.
The UK Chancellor George Osborne has proposed a €7bn loan to bolster the Irish bailout saying on November 22 ties between the two countries made such a move “overwhelmingly” in British interests.
“For the time being the pound will continue to take its cue from what’s happening in the euro area and whether people want to worry about contagion to sterling in terms of trade,” said Paul Robson, a senior foreign exchange strategist at Royal Bank of Scotland in London. “Further declines in terms of euro-sterling look likely.”
The pound traded 0.2pc stronger at 84.34 pence per euro at 9:46am in London, after yesterday appreciating to the strongest since September 21. Sterling reversed earlier losses to buy $1.5779 from $1.5772 yesterday, when it fell to the weakest since October 27.
Members of the Bank of England’s Monetary Policy Committee, which remains split on a possible extension of its asset- purchase program known as quantitative easing, speak before lawmakers in London today.
UK government bonds fell, pushing the 10-year yield up four basis points to 3.36pc. The two-year note yield rose two basis points to 1.02pc.