Sterling up as UK economy shows resilience

Sterling rose to a three-week high as data continued to suggest the UK economy is proving resilient to the Brexit vote.

It gained for a third day against the dollar and euro, its longest winning streak in more than a month, as a report showed consumer credit rose the fastest in almost a decade in July, while business lending also increased.

Survey evidence earlier this week suggested UK export orders had posted their best performance in two years, showing the UK currency’s decline since the June 23 vote to leave the EU is helping manufacturers.

That survey by the CBI had shown that 13 of the 18 industrial sub-sectors surveyed between July 26 and August 12 had reported better overseas orders than the previous month.

“So far, things in Britain haven’t been as bad as people expected,” said Marshall Gittler, head of investment research at FXPimus Europe in Cyprus.

The pound strengthened 0.8% to 84.98 pence against the euro in London trade.

It rose 0.3% to $1.3232, having earlier climbed to $1.3273, the highest since August 4.

Sterling is still the worst performer among major currencies since the referendum, tumbling 11% against the dollar.

Hedge funds and other large speculators boosted net negative bets on the currency to a record in the week ended August 16.

UK government securities fell as the Bank of England received a surplus of offers from investors to sell gilts to the central bank in its rebooted quantitative-easing programme yesterday.

The Bank of England bought £1.17bn (€1.37bn) of bonds due in seven to 15 years, meeting its weekly target. Most were acquired at a discount to the market price.

Benchmark 10-year gilt yields rose two basis points to 0.57%.