Pound Set for Weekly Gain against the Greenback

Tradervox.com (Dublin) - The sterling pound is headed for a second weekly gain against the dollar prior to a government report projected to show UK economy grew at a higher pace in the third quarter. Sterling was little changed against the euro after Bank of England Governor Mark Carney said yesterday the central bank will widen access to money-market operations and lower the cost of liquidity insurance. Gross domestic product expanded 0.8 percent compared with 0.7 percent in the previous three months, according to the median estimate of 40 economists in a survey before the Office for National Statistics releases the data at 9:30 a.m. in London.

According to Adam Cole, a London-based currency strategist at Royal Bank of Canada, the risks are to the upside for sterling as the economy is expected to have expanded by 1 percent in the last quarter. He was quick to note that the reading could be stronger than 1 percent. The Bank of England will expand the range of collateral it accepts in its facilities and offer money for longer periods on cheaper terms, Carney said in a speech in London late yesterday. Officials will also consider making some liquidity tools available to a wider array of institutions, he said.

The pound was little changed at $1.6206 as at the start of trading in London time after rising to $1.6257 on Oct. 23, the highest since Oct. 1. It has gained 0.3 percent versus the U.S. currency this week. Sterling traded at 85.24 pence per euro after depreciating to 85.55 pence yesterday, the weakest level since Aug. 29.

The pound gained 3.2 percent in the past three months, making it the best performer among 10 developed-nation currencies tracked by Correlation-Weighted Indexes. The euro rose 1.8 percent, while the dollar fell 2.6 percent. U.K. government bonds were little changed, with 10-year gilt yields at 2.62 percent. The rate fell to 2.59 percent on Oct. 23, the lowest since Aug. 27. The price of the 2.25 percent bond maturing in September 2023 was at 96.765. The two-year gilt yielded 0.44 percent.

Gilts lost 2.4 percent this year through yesterday, according to World Bond Indexes. Treasuries fell 1.9 percent and German securities slid 1.5 percent.

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