Pound Snaps 3-Day Decline Versus Euro Before U.K. Labor Report

The pound snapped a three-day decline against the euro before reports this week which analysts said will show the U.K. unemployment rate stayed at the lowest in a year in July and Britain’s trade deficit narrowed.
Sterling rose to a four-month high against the dollar last week as a gauge of U.K. services activity expanded in August and a report showed manufacturing rebounded, adding to signs the recession is easing. Data due tomorrow will show the trade deficit shrank to 9 billion pounds ($14.4 billion) in July, according to a Bloomberg News survey. A separate report on Sept. 12 will show the unemployment rate stayed at 8 percent, the lowest since July 2011.

The pound rose 0.2 percent to 79.91 pence per euro as of 7:46 a.m. London time. It weakened 1 percent against the 17- nation common currency on Sept. 7. The U.K. currency was little changed at $1.5992, after reaching $1.6034 on Sept. 7, the strongest level since May 15.
The pound has gained 0.6 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The dollar fell 1.6 percent and the euro rose 2.8 percent.

Gilts have returned 3.5 percent this year through Sept. 7, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies, outperforming German bunds, which gained 2.8 percent, and U.S. Treasuries, which earned 2.1 percent.

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