“The pound jumped to its strongest level in more than a month against the euro after the imposition of a levy on bank deposits in Cyprus threatened to throw Europe back into crisis, fueling demand for U.K. assets as a haven.
Sterling climbed by the most in five weeks against the currency shared by 17 European nations. Cypriot President Nicos Anastasiades bowed to demands by euro-area finance ministers to raise 5.8 billion euros ($7.5 billion) by taking a piece of every bank account in the island nation. U.K. government bonds gained, pushing down 10-year yields to the lowest this year. House prices rose for a third consecutive month in March, Rightmove Plc said.
“This is basically a euro story and something that explains the move in sterling,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt. “Euro- sterling is a choice between a rock and a hard place.”
The pound advanced 1 percent to 85.69 pence against the euro at 11:38 a.m. London time, after jumping by as much as 1.4 percent to 85.31 pence, the strongest level since Feb. 11. Sterling was little changed at $1.5119.
The U.K. currency has gained 1.6 percent in the past week, the best performer among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes amid speculation the Bank of England will boost its asset-purchase program to revive the economy. The central bank last increased the target in July, boosting it 50 billion pounds to 375 billion pounds.
The euro fell 0.8 percent and the dollar was little changed, in the period, while sterling has weakened 6.9 percent against the greenback.
