Pound Declines as Report Shows U.K. House-Price Growth Slowed in July

(Bloomberg) -- The pound fell for a second day after
a report showing U.K. house-price growth almost stalled in July,
signaling five interest-rate increases in the past year are
beginning to bite.

The pound slid from a 26-year high against the dollar after
figures from Nationwide Building Society showed house prices rose
0.1 percent from June, the slowest pace of growth in 15 months.
Bank of England Deputy Governor John Gieve said on July 24
interest rates at 5.75 percent are probably ``restrictive.''


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U.K. Gilts Post Weekly Drop as Bank of England Raises Rate to 5.75 Percent

(Bloomberg) -- Gilts fell this week, pushing 10-year
yields to the highest in more than seven years, on speculation
the Bank of England will keep raising the cost of borrowing to
cool inflation.

The BOE raised rates for a fifth time in 12 months this
week, to a six-year high of 5.75 percent, and signaled further
increases may be needed. The central bank said inflation risks in
the medium term ``lie to the upside.'' The government said
yesterday factory production rose in May to the highest in almost
six years, a sign rates aren't too high to support economic
expansion.


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U.K. Gilts Post Weekly Loss on Rates; Pound Stays Near Highest in 26 Years

(Bloomberg) -- U.K. bonds fell this week, pushing 10-
year yields to the highest in more than seven years, on
speculation the Bank of England will add to yesterday's interest-
rate increase in coming months to cool inflation.

The BOE raised rates for a fifth time in 12 months, to a
six-year high of 5.75 percent, and signaled further increases may
be needed. The central bank said inflation risks in the medium
term ``lie to the upside.'' The government said today factory
production rose in May to the highest in almost six years, a sign
rates aren't too high to support economic expansion.


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Dollar Gains Most Against Yen in More Than a Week on U.S. Job Growth

(Bloomberg) -- The euro rose to an all-time high
against the yen and gained versus the dollar as rising global
interest rates prompted Japanese investors to buy assets abroad.

The yen fell against all 16 of the most-actively traded
currencies as Japan's 0.5 percent interest rate, the lowest among
developed nations, encouraged investors to borrow in the country
for higher returns overseas in a practice known as the carry
trade. The Bank of England yesterday lifted borrowing costs a
quarter-percentage point to a six-year high of 5.75 percent.


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Pound Falls Against Dollar as U.S. Services Growth Unexpectedly Quickens

(Bloomberg) -- The U.K. pound fell against the
dollar after a U.S. report showed growth in service industries
unexpectedly quickened to the fastest pace in 14 months.

The pound has climbed nearly 3 percent versus the dollar
this year on anticipation U.K. economic growth that's outpacing
the U.S. will prompt the Bank of England to keep raising
interest rates. Expansion in U.S. service businesses, which make
up almost 90 percent of the economy, adds to evidence growth
picked up last quarter.


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U.K. Pound Holds Near 26-Year High on Bets BOE Will Increase Rates Today

(Bloomberg) -- The pound held near a 26-year high
against the dollar on speculation the Bank of England will lift
interest rates today and signal that further increases are needed
to curb inflation.

The U.K. currency climbed to $2.0207 yesterday, the highest
since June 1981, and has held above $2 for the past five days.
BOE policy makers will raise their interest rate a quarter-point
to a six-year high of 5.75 percent today, its fifth increase in
the past 12 months, according to 53 of the 60 economists surveyed
by Bloomberg News.


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Dollar near 26-year low vs pound before BoE and ECB

(Reuters) - The dollar stayed near a 26-year low against sterling and a two-month trough versus the euro on Thursday as investors awaited interest rate decisions by the European Central Bank and Bank of England later in the session.

The euro approached an all-time high against the yen on expectations that the European Central Bank President Jean-Claude Trichet will reinforce market views for higher rates even as the central bank is seen standing pat for now at 4.0 percent.


Read more at Reuters Africa

U.K. Pound May Hold Near 26-Year High on Bets BOE Interest Rates Will Rise

(Bloomberg) -- The U.K. pound may hold near its
highest in more than a quarter of a century against the dollar as
investors bet the Bank of England will raise interest rates this
week to curb inflation.

The currency rose above $2 last week and yesterday reached
$2.0185, its highest since June 1981. The BOE's Monetary Policy
Committee members will decide on borrowing costs July 5, and
economists surveyed by Bloomberg News expect them to lift the
benchmark rate by a quarter-point to 5.75 percent.


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Pound Heads for Biggest Weekly Rise in Two Months Versus Dollar on Rates

(Bloomberg) -- The pound headed for its biggest
weekly gain in two months versus the dollar on speculation the
Bank of England will raise interest rates next month, boosting
the appeal of holding assets denominated in the currency.

Nationwide Building Society will probably say next week the
pace of growth in U.K. house prices quickened during June,
according to economists in a Bloomberg survey. The pound climbed
this week after minutes of the Bank of England's June policy
meeting showed Governor Mervyn King and three other policy
committee members backed higher borrowing costs.


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Pound Headed for Weekly Drop Versus Dollar on Signs U.K. Growth Is Slowing

(Bloomberg) -- The pound headed for a third week of
losses versus the dollar as reports showed Europe's second-
largest economy may be slowing enough to ease pressure on the
Bank of England to keep raising interest rates.

The U.K. currency fell as data this week showed inflation
slowed to a seven-month low last month, while growth in wages
eased in April. A report showed retail sales growth slowed in
May, reinforcing speculation four interest-rate increases since
August are crimping expansion in the $2.4 trillion economy.


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U.K. Pound Declines Against Dollar on Signs Economic Growth Is Slowing

(Bloomberg) -- The pound declined versus the dollar
and the euro as signs the U.K. economy may be slowing stoked
speculation the Bank of England won't need to keep raising
interest rates.

A government report today showed average earnings growth
slowed in April. Economists in a Bloomberg News survey predicted
they would quicken. The U.K. currency extended its decline before
a report tomorrow that is expected to show retail sales grew more
slowly last month.


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Bank of England May Have to Move Faster to Curb Worst Inflation in Decade

(Bloomberg) -- The Bank of England, which left
interest rates unchanged yesterday, may have to move faster to
curb the U.K.'s worst bout of inflation in a decade.

Manufacturers' optimism about their pricing power rose to a
12-year high in May, retailers are confident they can push
through their biggest price increases since 1998 and gains in
consumer prices have exceeded the bank's 2 percent target for the
past year. That's fanning concern that inflation is becoming
entrenched in the economy even after four rate increases in the
past year.


Read more at Bloomberg Bonds News

Gilts Drop on Speculation Bank of England Will Lift Rates Again This Year

(Bloomberg) -- U.K. government bonds declined on
speculation Bank of England policy makers will increase interest
rates again this year to counter inflation in Europe's second-
biggest economy.

The central bank will keep the Bank Rate at 5.5 percent at
noon today after raising it to the highest since April 2001 last
month, according to all but four of 62 economists in a Bloomberg
News survey. The bank will lift the rate a quarter-point by its
August meeting, a separate survey shows.


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Housing Market in U.K. Isn't Overvalued, Former Rate-Setter Nickell Says

(Bloomberg) -- The U.K. housing market is not
overvalued, and prices may increase further in the next few years
because of a shortage of properties, former Bank of England
policy maker Stephen Nickell said.

``It might settle back a little, or remain relatively flat
for a bit, but I don't think there's any fundamental
overvaluation,'' Nickell, who served on the rate-setting panel
from 2000 to 2006, said in a telephone interview yesterday.
``Over the next few years it might keep on edging upwards.''


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Pound Gains Against Euro After Consumer Confidence Reaches 18-Month High

(Bloomberg) -- The pound rose against the euro and
traded near the strongest in a month against the dollar after a
report showed consumer confidence reached an 18-month high.

The U.K. currency has strengthened against the dollar so
far this quarter as traders bet the Bank of England will raise
interest rates at least once more this year. The central bank
will tomorrow hold rates at 5.5 percent, a six-year high, at a
policy meeting, according to a Bloomberg survey of economists.


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U.K. Pound Gains Versus Dollar on Speculation Bank to Raise Rate This Week

(Bloomberg) -- The U.K. pound advanced against the
dollar on speculation the Bank of England will increase interest
rates at its monthly meeting this week.

The currency also rose to the highest in almost 15 years
versus the yen, as a gain in equity markets encouraged so-called
carry trade investors to take advantage of low interest rates in
Japan to buy the pound and other higher-yielding assets. BOE
policy makers are due to announce their decision on U.K. borrowing
costs on June 7.


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JGB futures hit month low as overseas yields rise

(Reuters) - The European Central Bank and the Bank of England are
expected to boost interest rates further, while speculation has
receded that the Federal Reserve will cut interest rates later in
the year.




Since the BOJ ended its extraordinary, super-loose monetary
policy in March 2006, it has raised interest rates twice to a
decade-high 0.5 percent , and many market players expect a third
rate hike in the July-September quarter.


Read more at Reuters.com Bonds News

Pound Gains to $2, First Time in 15 Years, as Inflation Hits 3.1 Percent

(Bloomberg) -- The pound leapt to $2 for the first time in 15 years as a U.K. report showed inflation unexpectedly quickened to a decade high, prompting traders to bet the Bank of England will raise interest rates twice more this year.

The U.K. pound reached the strongest since September 1992, when billionaire investor George Soros and other speculators drove the currency out of the European system of linked exchange rates. Britain's economy, Europe's second-biggest, has shown few signs of cooling after three rate increases since early August. Another quarter-point move would take borrowing costs to 5.5 percent, the highest among the Group of Seven major economies.


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