The pound rose for the first time in three days against the dollar before the Bank of England releases its latest policy decision on Thursday.
Britain’s currency was little changed versus the euro. Sterling weakened versus all of its 16 major counterparts last week as Bank of America Merrill Lynch said the rally that propelled it to a nine-month high versus the dollar would wane. Bank of England policy makers led by Governor Mark Carney have said they will keep interest rates at a record low at least until unemployment falls to 7 percent.
The pound rose 0.2 percent to $1.6036 at 7:42 p.m. London time after rising to $1.6260 on Oct. 1, the highest level since Jan. 2. The U.K. currency was at 84.62 pence per euro after depreciating 1.1 percent last week.
Sterling jumped 4.4 percent versus the dollar in September as improving economic data prompted investors to increase bets the central bank would raise borrowing costs earlier than it had predicted. Services activity expanded last month and house prices climbed, reports showed last week.
The Bank of England will keep its benchmark rate at 0.5 percent and leave its asset-purchase target at 375 billion pounds when it announces its policy decision on Oct. 10, according to Bloomberg News surveys of economists.
Gilts handed investors a loss of 3.01 percent this year through Oct. 4, according to Bloomberg World Bond Indexes. German bunds dropped 1.9 percent and Treasuries declined 2.5 percent.
Chart: WorldWideMarkets Alpha Trader