British Pound Strengthens Against Euro Before BOE Rate Decision

By Keith Jenkins

Dec. 10 (Bloomberg) -- The pound rose against the euro for the first day in three before the Bank of England decides on interest rates and its asset-purchase plan.

Sterling also snapped a five-day decline versus the U.S. currency. Policy makers, led by Governor Mervyn King, will keep the benchmark rate at a record low of 0.5 percent and their bond-buying program unchanged at 200 billion pounds ($326 billion), according to separate analyst surveys by Bloomberg.

We don’t expect any policy change from the Bank of England, said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London.

The pound appreciated to 90.43 pence per euro as of 9:16 a.m. in London, from 90.56 pence yesterday. The U.K. currency was little changed at $1.6267, from $1.6261.

Sterling may depreciate toward $1.50 and 92.40 pence against the euro over the next six months, Hardman said.

Gilts dropped, sending the yield on the 10-year bond up 13 basis points to 3.79 percent. The two-year note yield advanced 4 basis points to 1.15 percent.

To contact the reporter on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net