The pound rose against the euro after an industry report showed U.K. construction improved last month and as European Central Bank President Mario Draghi said the region’s policy makers are open to negative interest rates.
Sterling fell for the first time in seven days versus the dollar. The U.K. currency has risen 2.7 percent in the past month against the greenback after slipping 6.5 percent in the first quarter and climbed yesterday as data showed manufacturing shrank in April by less than economists predicted. U.K. government bonds rose, pushing 10-year yields to the lowest since September.
“At the moment, the U.K. economy is surprising more downbeat expectations” and allowing the pound to rally, said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. The past month’s advance against the dollar “is a corrective rebound phase after a sharp decline in the first quarter.”
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