The pound gained for a fourth day versus the euro and dollar as data showed U.K. mortgage approvals in July beat analyst estimates, signaling the housing market is growing unabated amid tougher lending rules.
Sterling rose the most since early July versus the euro last week on bets the European Central Bank will add stimulus at its Sept. 4 meeting while Bank of England officials debate raising interest rates. A separate report today showed U.K. manufacturing expanded for an 18th month in August, albeit at the slowest pace since June last year. U.K. government bonds fell before the Debt Management Office sells 4 billion pounds ($6.65 billion) of gilts maturing in 2020 tomorrow.
“In an overall weak-euro environment we would expect sterling to perform quite strongly against the euro,” said Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley in London. “When we look at the potential for policy divergence, obviously the U.K. against Europe does span out.”