The pound climbed to the highest level this year against the euro and rose versus the dollar as stocks gained and a government report showed manufacturing in the U.K. expanded for a second month.
The British currency also strengthened against the yen as equities snapped two days of losses, pushing the benchmark FTSE 100 Index to a one-week high. Production increased 0.2 percent in April from March, when it rose by the same amount, the office for National Statistics said today. Bank of England Deputy Governor Paul Tucker said yesterday confidence may be stabilizing.
“Sterling is still very much correlated to equity markets,” said Ian Stannard, a currency strategist in London at BNP Paribas SA. “The biggest factor is the overall improving investment environment, which is going to be supportive for sterling.”
The pound strengthened as much as 0.7 percent to 85.68 pence per euro, the highest level since Dec. 3, and was at 85.88 pence by 2 p.m. in London. It also rose 0.5 percent to $1.6385 and 1.1 percent to 160.58 yen.
The pound may appreciate to $1.69 in “coming weeks,” Stannard said.
From Bloomberg News