“The pound headed for its biggest monthly gain versus the dollar since September as a report showed British banks granted more loans for homes in March than analysts predicted, adding to signs the economy is improving.
Sterling was set for its first monthly advance against the euro since July even as a report showed U.K. consumer confidence unexpectedly declined in April. Futures traders decreased their bets that the pound will weaken against the dollar, figures from the Washington-based Commodity Futures Trading Commission showed last week. U.K. government bonds were little changed as the Debt Management Office sold 50-year inflation-linked gilts at a record-low yield.
“If you look at speculative positions, accounts are still fairly short the pound,” said Kasper Kirkegaard, a senior currency strategist at Danske Bank A/S (DANSKE) in Copenhagen, referring to a bet that the price of an asset will fall. “That’s been gradually scaled back and we can see potential for it to go even higher in the short term.”
The pound was little changed at $1.5479 at 12:38 p.m. London time after climbing to $1.5546 yesterday, the most since Feb. 15. The U.K. currency has gained 1.9 percent this month. Sterling traded at 84.47 pence per euro after appreciating to 83.98 pence on April 26, the strongest since Jan. 24. It has risen 2 percent against the common currency in April.
Britain’s currency may weaken to $1.43 and 88 pence per euro in six months’ time, Danske Bank’s Kirkegaard said. The median predictions in Bloomberg surveys of economists and strategists is for the British currency to end the year at $1.49 and 85 pence per euro.
