2013.04.1004:59:54UTC+00Pound advances against Dollar after production progress; Gilts decline

The pound powered up to a six- week high versus the dollar after U.K. industrial production boost in February more than economists prediction, bolstering assumption the nation will refrain from a triple-dip recession.

Sterling surged for the fourth time in five days against the greenback after gauges of manufacturing and retail sales also develops. The pound has jumped 1.7 percent in the past month, trimming this year’s decrease to 4.5 percent, the second-worst mover after the yen, according to Bloomberg Correlation- Weighted Indexes that track 10 developed-nation currencies. U.K. government bonds drop after an auction of 10-year securities draw the lowest demand since June 2012.

“The production figures seem to have been taken very well,” said Lee McDarby, head of dealing on the corporate and institutional treasury desk at Investec Bank Plc in London. “Now that sterling has firmly handed its crown of whipping boy over to the yen, it’s good to see it get a bit of a boost from good figures. We think that triple-dip recession will be avoided.”

The pound moved a notch with 0.5 percent to $1.5324 at 4:43 p.m. London time after elevating to $1.5363 on April 5, the best since Feb. 20. Sterling gave up 0.2 percent to 85.45 pence per euro after depreciating to 85.60 pence, the lowest since March 25.

U.K. industrial output expanded 1 percent in February, after surrendering 1.3 percent the previous month, the Office for National Statistics said in London.

The same report for the manufacturing sector displayed a boost of 0.8 percent, while the British Retail Consortium stated that its measure of retail sales grows 1.9 percent in March from a year earlier.

Gilts Drop

Gilts dive down for a second day as signs the economy is developing damped demand for safer assets.

The 10-year yield jumped four basis points, or 0.04 percentage point, to 1.74 percent after improving seven basis points yesterday. The 1.75 percent bond due September 2022 shrink 0.375, or 3.75 pounds per 1,000-pound face amount, to 100.08.

The Debt Management Office sold 3.5 billion pounds of benchmark 10-year securities at a yield of 1.734 percent, down from 2.147 percent at the previous offering on Feb. 21. That compares with a record-low auction yield of 1.719 percent set on July 12. The so-called bid-to-cover ratio back slides to 1.68 from 2.25 in February.

“The relative selloff seen in 10-year gilts in the past couple of sessions has been supportive at today’s auction,” Annalisa Piazza, a fixed-income analyst at Newedge Group in London, wrote in note to clients.

Britain’s economy possibly grow in the first quarter and escape a triple-dip recession, according to an estimate from the National Institute of Economic and Social Research.

Gross domestic product move a little to 0.1 percent, the similar pace as in the three months through February, the institute, whose clients include the Bank of England, stated in a statement today.

Gilts returned 1.9 percent this year through yesterday based on indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bonds gained 1 percent and Treasuries pushed higher 0.6 percent.