Britain's currency also rebounded from a record low against the euro after a government report today showed U.K. factory prices grew last month at the fastest pace since 1991. Consumer- price inflation probably rose to the highest level in almost a year, exceeding the central bank's 2 percent target for a sixth month, according to a Bloomberg News survey before data tomorrow.
The pound strengthened to 80.04 pence per euro by 11:19 a.m. in London, from 80.31 pence at the end of last week, when it dropped to an all-time low of 80.38 pence. It also rose to $1.9747, from $1.9691, and gained versus 15 of the 16 most-traded currencies tracked by Bloomberg.
U.K. producer prices climbed 6.2 percent from a year earlier, compared with 5.9 percent in February, the Office for National Statistics said today. Economists predicted a gain of 5.6 percent, according to the median of 31 forecasts in a Bloomberg survey. Raw material costs rose 20.6 percent on the year, the most since records began in 1986.
Consumer prices in Britain probably climbed an annual 2.6 percent, the most in 11 months, according to the median forecast of 36 economists surveyed by Bloomberg before a government report tomorrow.
The pound has fallen 8.7 percent against the euro this year on speculation the collapse of the U.S. subprime-mortgage market will force the Bank of England to lower borrowing costs further while the European Central Bank keeps its benchmark rate on hold.
Britain's central bank last week cut its main rate a quarter-point for the third time since December, to 5 percent, while the ECB held its benchmark rate at a six-year high of 4 percent, citing ``upward pressure'' on inflation.
The Group of Seven major economies said it's concerned ``sharp fluctuations'' in currency markets may hurt the global economy. In its statement following this weekend's meeting in Washington, the G-7 pledged to ``monitor exchange markets closely, and cooperate as appropriate.''