The pound strengthened for the first time in three days against the dollar after an industry report showed optimism in the U.K.’s financial industry improved in the third quarter, underlining the strength of the British economy.
Sterling advanced versus all except one of its 16 major counterparts before the Bank of England’s announces its policy decision on Thursday. The U.K. currency fell last week as Bank of America Merrill Lynch said the rally that propelled it to a nine-month high versus the dollar would wane. U.K. government bonds rose after U.S. Treasury Secretary Jacob J. Lew said America risks defaulting on its payments, boosting demand for haven assets.
“At the moment, you can’t ignore the data,” said Paul Robson, senior currency strategist at Royal Bank of Scotland Group Plc in London. “People have to decide whether the longer-term outlook for sterling is still challenging or the pickup in data that we’ve seen suggests that the recovery will be robust. We think sterling is starting to look” too strong at current levels, he said.
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