The pound posted its biggest weekly advance in almost two years against the euro as speculation the European Central Bank will start government-bond purchases stoked demand for the U.K. currency as a haven.
Sterling climbed to the strongest level since February 2008 versus the 19-member common currency after the Swiss National Bank unexpectedly removed its cap on the franc against the euro. ECB policy makers are set to meet in Frankfurt on Jan. 22. U.K. government bonds rose for a third week, pushing the 30-year gilt yield to a record low, after the slowest inflation in almost 15 years caused traders to abandon bets that the Bank of England will raise interest rates.
“What brought euro-sterling down was the thought that the Swiss National Bank must have known something,” said Nick Beecroft, a strategist at Saxo Bank A/S in London. “It will be an impressive shock-and-awe announcement.”
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