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GBP/USD at 1.59 after Summers’ Withdrawal

The pound rose to an eight-month high versus the dollar as Lawrence Summers withdrew from the race to lead the Federal Reserve, ending bets he would undo the central bank’s policies aimed at holding down borrowing costs.

U.K. government bonds advanced with U.S. Treasuries, pushing 10-year gilt yields to the lowest level in more than a week. Summers, a former Treasury secretary, would tighten Fed policy more than Janet Yellen, who was his main rival to replace Chairman Ben S. Bernanke, according to a Bloomberg Global Poll last week. Sterling was about 0.3 percent from its strongest level versus the euro since January as Rightmove Plc increased its forecast for growth in U.K. house prices this year.

“There’s been a selloff in the dollar,” said Michael Sneyd, a foreign-exchange strategist at BNP Paribas SA in London. “Of the two main candidates, Yellen was seen as being a continuation of Bernanke and it was thought Summers would have been a change. The pound is approaching the key psychological level of $1.60.”

Bloomberg [1]

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