The pound pared declines that sent it to a two-month low versus the euro after a central-bank report showed U.K. mortgage approvals rose in September, adding to signs the property market is improving.
Britain’s currency also trimmed losses against the dollar. Lenders granted 66,735 mortgages, the most since February 2008, compared with a revised 63,396 the previous month, the Bank of England said in London. U.K. government bonds were little changed before Prime Minister David Cameron outlines the nation’s plans to become the first country outside the Muslim world to sell a Shariah-compliant security.
“These numbers reaffirm that the recovery is there but that it still has a long way to go,” said Jane Foley, a senior currency strategist at Rabobank International in London. “There’s a lot of good news already in the price of the pound and it will take something significant to push it higher. The economy is recovering but we would be getting ahead of ourselves to suggest there’s an explosion in growth.”
The pound fell 0.2 percent to 85.54 pence per euro as of 10:03 a.m. London time after declining to 85.72 pence, the weakest since Aug. 29. Sterling depreciated 0.3 percent to $1.6096 after dropping as much as 0.5 percent.
Annual house-price inflation accelerated to 3.1 percent in October, the most since November 2007, London-based property researcher Hometrack said yesterday.
The pound gained 3.1 percent in the past three months, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro rose 1.9 percent, while the dollar fell 2.2 percent.
Benchmark 10-year gilt yields were at 2.60 percent after declining to 2.59 percent on Oct. 23, the lowest level since Aug. 27. The price of the 2.25 percent bond maturing in September 2023 was at 97.015.
Cameron will lay out the U.K.’s intentions at the World Islamic Economic Forum in London, according to excerpts of a speech released by his office. The Islamic bonds, known as sukuk, would be valued at about 200 million pounds. He will also say that London Stock Exchange Group Plc (LSE) is creating an Islamic market index.
U.K. government bonds lost 2.1 percent this year through yesterday, according to Bloomberg World Bond Indexes. Treasuries fell 1.8 percent and German securities declined 1.4 percent.
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