The pound rose for the first time in four days versus the euro as inflation slowed to the Bank of England’s target for the first time in more than four years, boosting optimism the U.K.’s economic recovery will strengthen.
Sterling climbed the most in two weeks versus the dollar as a report showed inflation reached the central bank’s 2 percent threshold last month, helping Governor Mark Carney to keep interest rates at a record low for longer. U.K. government bonds erased gains that had sent 10-year gilt yields to the lowest level in six weeks.
“Abating price pressures would continue to support the real purchasing power of U.K. consumers and prop up growth,” said Valentin Marinov, head of European Group-of-10 currency strategy at Citigroup Inc. in London. “The improving macroeconomic background should continue to support sterling and it could be a buy on dips.”
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