British Pound Falls Against Euro


The pound fell against the euro after an industry survey showed confidence among Britain's consumers dropped in June to the lowest level in at least four years.

The pound's trade-weighted index slipped for a fourth day, the longest losing run since May, after Nationwide Building Society's index of sentiment dropped 6 points to the weakest since the survey began in May 2004. The currency rebounded against the dollar after Iran's state television said a missile, capable of reaching Israel, was fired during war games today.

The pound fell to 79.63 pence per euro by 1:03 p.m. in London, from 79.57 pence yesterday. It was at $1.9719, from $1.9696, after falling to as low as $1.9673 earlier.

The pound's trade-weighted index, a broader gauge of the currency's performance against Britain's major trading partners, slipped to 88.94, the lowest level since June 12.

U.K. government bonds fell, snapping a six-day advance, as gains in stocks sapped demand for the safest assets. Gilts also followed European bonds lower after European Central Bank President Jean-Claude Trichet said today inflation risks have ``intensified'' recently.

The MSCI World Index added 0.5 percent, with financial stocks climbing the most in two months. Financial equities have led a rout that erased more $11 trillion from global equities in 2008. The U.K.'s FTSE 100 Index rose 1.6 percent.

The U.K. is skirting a recession as house prices fall, banks roll back credit and oil costs increase. Bank of England Governor Mervyn King said June 26 the inflation rate may jump to 4 percent, double the target, and that the economy may contract.


TradingEconomics.com, Bloomberg
7/9/2008 6:46:54 AM