The pound approached a 2 1/2-year high versus the dollar before data tomorrow analysts said will mark the first full year the U.K. economy expanded in every quarter since the financial crisis began in 2007.
Sterling advanced against all but one of its 16 major peers, snapping a two-day drop versus the euro. Britain’s gross domestic product increased 0.7 percent in the the fourth quarter after growing 0.8 percent in the three months through September, according to the median forecast of economists in a Bloomberg News survey. U.K. government bonds declined, with the 10-year yield rising from near a two-month low.
We forecast “a continuation of the above-trend growth that we’ve seen for three quarters,” said Adam Cole, head of Group of 10 currency strategy at Royal Bank of Canada in London. “The market is trading on the timing of the first rate hike. We do think sterling can keep outperforming.”