The pound climbed for a second day against the euro as a report showing German investor confidence fell to the lowest level since December 2012 boosted the allure of the U.K. currency as an alternative to its European peer.
U.K. government bonds were little changed before the Bank of England releases its quarterly Inflation Report tomorrow, which may offer clues on the timing of the institution’s first increase in borrowing costs since 2007. The pound earlier touched its lowest level in almost nine weeks versus the dollar after a report showed U.K. food sales tumbled the most in at least 5 1/2 years.
“We had a move in euro-sterling on the back of the German survey,” said Eimear Daly, the head of market analysis at London-based broker Monex Europe Ltd. “There is also positioning ahead of the Inflation Report tomorrow. People are hedging their bets we could get a clear signal from the Bank of England” regarding interest-rate increases, she said.