The
pound jumped more than 1 percent against the euro, the biggest gain in six
months, after euro-area inflation slowed and the jobless rate climbed to a
record, boosting demand for alternatives to Europe’s shared currency.
Sterling
advanced for a second day versus the euro as the reports spurred speculation
the European Central Bank will cut interest rates as soon as its meeting next
week to revive growth. The pound may extend gains, according to UBS AG. U.K.
government bonds fell as an index of U.S. business activity expanded at the
fastest pace since March 2011, damping investor appetite for safer assets.
The
pound advanced 1.1 percent to 84.70 pence per euro at 4:42 p.m. London time,
the biggest gain April 25. The rally came after the U.K. currency slipped to
85.85 pence on Oct. 29, the weakest since Aug. 29. Sterling was little changed
at $1.6047.
The
ECB will cut its refinancing rate by a quarter percentage point to 0.25 percent
at its Nov. 7 meeting, according to a research note from UBS. BNP Paribas SA,
JPMorgan Chase & Co. and Scotiabank also changed their ECB calls today and
now predict officials will lower rates in December.
(Source: Bloomberg)