The pound approached a seven-week high against the dollar after a government report showed Britain’s trade deficit narrowed in June as exports jumped, adding to evidence the economic recovery is gathering pace.
Sterling was poised for its biggest weekly gain versus the euro since April. The U.K. currency rose against the dollar yesterday after Bank of England Governor Mark Carney reiterated policy makers’ commitment to bring down inflation. U.K. government bonds fell as a report showed construction output declined in June less than economists predicted.
“The markets have continued to price in the recovery story, and that’s providing a residual support for sterling currently,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London.
The pound gained 0.1 percent to $1.5548 at 10:25 a.m. London time after rising to $1.5574 yesterday, the highest level since June 19. Sterling was little changed at 86.08 pence per euro, having appreciated 0.9 percent this week, the most since the period ended April 26.
The U.K. deficit on trade in goods narrowed to 8.1 billion pounds from 8.7 billion pounds in May, the lowest since July 2012, the Office for National Statistics said in London. Exports increased almost 5 percent in the second quarter, the most since the series began in 1998.
Construction output fell 0.8 percent from May. The median prediction of economists was for a decline of 1.9 percent.
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