08.06.201306:42:19UTC+00Pound advances most in 3 years on indications U.K. economy powered higher

The pound had its largest weekly advance against the dollar in more than three years as U.K. manufacturing, services and home-price data beat economist predictions, increasing confidence in the economy.

Economic Surprises

The currency was boosted after a June 5 report showed a gauge of service industry activity from Markit Economics and the Chartered Institute of Purchasing and Supply rose to 54.9 for May, the highest in 14 months. That’s more than the 53.1 median forecast in a Bloomberg survey. A reading above 50 indicates expansion. Separate Markit reports on manufacturing and construction on the prior two days also rose more than economists estimated. U.K. house prices rose for a fourth month in May, Halifax said on June 6.

The Bank of England kept its asset-purchase target at 375 billion pounds and the benchmark interest rate at a record low of 0.5 percent on June 6. King’s successor Mark Carney takes over at the start of next month.

“The next big thing that pound moves are going to be based on is what the view is of Carney when he comes in,” said Lee McDarby, head of dealing on the corporate and institutional treasury desk at Investec Bank PlC in London. “There’s going to be nervousness over what he could do.”

The U.K. 10-year yield climbed seven basis points, or 0.07 percentage point, in the week to 2.07 percent. The price of the 1.75 percent bond due in September 2022 declined to 97.325.

The U.K. Debt Management Office will auction 3.75 billion pounds of new benchmark 10-year gilts on June 11 and 2.25 billion pounds of debt due in 2032 two days later.