(Bloomberg) -- The pound rebounded from its lowest level in almost three weeks against the dollar after results from Tesco Plc and Burberry Group Plc bolstered speculation the U.K. economic slump may be easing.
The British currency swung between gains and losses versus the euro after an industry report showed German investor confidence climbed to the highest level in almost two years in April, and stock markets fluctuated. Gilts declined after Bank of England policy maker Paul Fisher said its quantitative easing plan is “about the right size.”
“Things have stopped getting worse in the U.K. and in some cases are actually improving again,” said Neil Jones, head of European hedge fund sales in London at Mizuho Corporate Bank Ltd. “I’m positive on sterling. I think the U.K. economy will outperform its peers.”
The pound advanced to $1.4696 by 4:50 p.m. in London, from $1.4540 yesterday. It earlier fell to $1.4469, the weakest since April 2. The pound strengthened to 88.45 pence per euro, from 88.87 pence.
Tesco, Europe’s second-biggest retailer, said sales at U.K. stores open at least a year increased 3.4 percent in the six weeks since the end of February, quicker than the fourth quarter’s 2.7 percent gain. Burberry, Britain’s largest publicly traded luxury-goods company, reported revenue that beat analysts’ estimates.
Tesco rose 5 percent in London trading, with Burberry jumping 13 percent.
Fisher told Parliament’s Treasury Committee in London that the 75 billion-pound ($109 billion) amount committed thus far “looks to me to be calibrated reasonably well,” suggesting the central bank may not use all the funds available to it. The Treasury will announce record gilt issuance for the year through March 2010 tomorrow, according to a Bloomberg survey.
The decline in gilts pushed the yield on the 10-year bond 12 basis points higher to 3.33 percent. The 4.5 percent security due March 2019 fell 1.04, or 10.4 pounds per 1,000-pound face amount, to 109.79.
To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net
