London: The British pound advanced against the dollar for the second week amid signs the UK economic recovery is taking hold, potentially reducing the need for the central bank to extend stimulus measures.
Sterling rose for the first week in four against the euro after the Office for National Statistics said gross domestic product jumped 1.1 per cent in the second quarter, compared with 0.3 per cent growth in the previous period. June retail sales climbed 0.7 per cent on the month, exceeding the median estimate for 0.5 percent in a Bloomberg survey of economists. Gilts fell.
"The GDP numbers have been a big blow for sterling bears," said Kenneth Broux, a senior market economist at Lloyds Banking Group Plc in London. "For the short term it's bullish for cable," he said, referring to the pound-dollar rate. The pound gained 0.8 per cent to $1.5423 as of 4:27pm in London on July 23, from $1.5301 on July 16. It appreciated 1.4 per cent to 83.30 pence per euro.
Britain's currency has gained 8.4 per cent against the dollar since reaching a low for the year of $1.4231 on May 20 amid optimism Prime Minister David Cameron's newly-elected coalition will control the nation's budget deficit without halting economic growth. UK inflation rose to a 17-month high in April and was at 3.2 per cent in June, above the government's 3 per cent upper limit, adding support for the currency. The Bank of England's Monetary Policy Committee considered expanding stimulus measures to safeguard Britain's economic recovery, minutes from the July 8 meeting showed.
