U.K. Pound Rises to Highest in 26 Years on Outlook for BOE Interest Rates

(Bloomberg) -- The pound rose to its strongest in
26 years against the dollar on speculation the Bank of England
will keep raising interest rates.

The highest benchmark bond yields of any Group of Seven
nation have lured investors from abroad and pushed up the pound.
A report last week showed the U.K.'s economic expansion
unexpectedly quickened in the second quarter, while the U.S.
Federal Reserve trimmed its forecast for growth.


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U.K. Pound Posts Fifth Weekly Advance Versus Dollar on Interest Rate Views

(Bloomberg) -- The pound posted its longest winning
streak versus the dollar in more than a year on speculation the
Bank of England will keep raising interest rates while the
Federal Reserve stays on hold.

The U.K. currency gained for a fifth week as futures traders
bet the central bank will raise rates a quarter-point and start
pricing in a further move to 6.25 percent by year-end. The pound
touched a 26-year high after Moody's Investors Service cut
ratings on bonds backed by U.S. subprime mortgages and Standard &
Poor's threatened to do the same.


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Pound Gains to 26-Year High Against Dollar, Gilts Surge on Subprime Woes

(Bloomberg) -- The pound rose to a 26-year high
against the dollar and U.K. bonds surged after Standard & Poor's
said it may cut ratings on $12 billion of bonds backed by U.S.
subprime mortgages.

The U.K. pound climbed the most against the dollar in more
than a month. The currency was buoyed earlier after a report
showed sales at U.K. retailers increased at the fastest pace
since March last month, stoking speculation the Bank of England
will raise interest rates from a six-year high.


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U.K. Pound Rises to 26-Year High on Interest Rates, Retail Sales Report

(Bloomberg) -- The pound rose to a 26-year high
against the dollar after a report showed sales at U.K. retailers
increased at the fastest pace since March last month.

The U.K. currency gained for a second day on speculation
signs of continued growth in consumer spending will prompt the
Bank of England to keep raising interest rates. The pound was
also buoyed by data showing the country's trade deficit
unexpectedly narrowed in May.


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Dollar near 26-year low vs sterling

(Reuters) - The Bank of England is widely expected to lift rates by 25 basis points to 5.75 percent after a two-day meeting that ends on Thursday, taking them further above the Federal Reserve's 5.25 percent rate.




Also on Thursday, the European Central Bank and its president, Jean-Claude Trichet, are seen reinforcing expectations for higher rates in the euro zone eventually, while keeping them on hold for now at 4.0 percent.


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U.K. Pound May Fall on View Recent Advance Excessive, as Confidence Slips

(Bloomberg) -- The pound may fall against the dollar
on views its recent rise to a 26-year high was excessive, and
after a report showed U.K. consumer confidence fell for the first
time in six months in June.

The U.K. currency rose to $2.0196 yesterday on speculation
Bank of England's policy makers will raise interest rates this
week to a six-year high of 5.75 percent. A separate survey later
today will probably show the services sector expanded at a slower
pace in June.


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Dollar Trades Near Record Low Against Euro Before Central Bank Meetings

(Bloomberg) -- The dollar traded near a record low
against the euro and the weakest in 26 years versus the British
pound on speculation central banks in Europe will raise interest
rates while the Federal Reserve remains on hold.

The U.S. dollar has declined against 14 of the 16 most-
active currencies this year as a housing slump prompted traders
to bet the Fed will hold, or lower, borrowing costs this year.
The Bank of England will probably raise rates tomorrow for a
third time this year and the European Central Bank may signal
plans to add to two increases this year to tame inflation.


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U.K. Government Bonds Climb on Terror Threat, Pound Gains on Rate Outlook

(Bloomberg) -- Gilts gained, pushing 10-year yields
to near a three-week low, as investors bought the safest assets
after U.K. police arrested five people following an attack on
Glasgow's airport and two attempted car bombings in London.

The gain in gilts, snapping a two-day losing streak, came
after the U.K. Home Office raised its terrorist threat assessment
for the country to ``critical'' after the incidents. The pound
gained for a fifth day before the Bank of England's meeting on
July 5 when policy makers are expected to raise interest rates by
25 basis points to 5.75 percent.


Read more at Bloomberg Bonds News

U.K. Pound May Hold Above $2 Before House Price Data, BOE's Rate Decision

(Bloomberg) -- The pound may hold above $2 ahead of
the Bank of England's interest-rate decision and before data that
will probably show four increases in borrowing costs since August
haven't crimped house-price growth.

Policy makers will decide on interest rates July 5, and
economists surveyed by Bloomberg News expect them to lift the
benchmark rate a quarter-point to 5.75 percent. The U.K.'s
biggest mortgage lender HBOS Plc will say this week say house-
price growth quickened in the three months through June,
according to economists in a Bloomberg News survey.


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Pound Posts Sixth Quarterly Gain on Speculation Rates Will Keep Rising

(Bloomberg) -- The pound posted a quarterly gain,
its sixth in a row, after a rise in consumer and mortgage lending
supported the view that the Bank of England will keep raising
interest rates to curb inflation.

Data showed consumer credit growth almost doubled in May and
mortgage approvals unexpectedly rose to a three-month high,
suggesting the BOE must do more to cool price growth. Policy
makers next decide on interest rates on July 5, and economists
surveyed by Bloomberg News expect them to lift the main benchmark
a quarter-point to 5.75 percent.


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U.K. Pound Advances to Four-Month High Versus Euro on Speculation to Rise

(Bloomberg) -- The pound climbed to the highest in
almost four months against the euro on speculation investors will
keep increasing bets on higher interest rates in Europe's second-
largest economy.

The currency has risen almost 1 percent versus the euro this
week as minutes of the Bank of England's June policy meeting
yesterday showed Governor Mervyn King and three other policy
committee members backed higher borrowing costs. That prompted
HSBC Plc and JPMorgan Chase Co. to bring forward their forecasts
of the next interest-rate rise.


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Pound May Fall Against Euro Before Bank Releases Minutes of June Meeting

(Bloomberg) -- The U.K. pound may fall versus the
euro on speculation the minutes of the Bank of England's last
policy meeting will prompt investors to reduce their bets on more
interest-rate increases.

The currency may decline from a near one-week high as almost
half of the 26 economists in a Bloomberg survey expect the
minutes will show all policy makers favored keeping rates on
hold. Economic reports last week showed inflation in Europe's
second-largest economy was the slowest in seven months in March.


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Pound Advances for Third Day Versus Dollar as Interest Rates Lure Buyers

(Bloomberg) -- The U.K. pound gained for a third day
against the dollar, its longest winning run in almost two weeks,
on speculation the highest interest rates among the Group of
Seven nations will keep attracting investors.

The currency of Europe's second largest economy has risen
0.8 percent since June 11, when Bank of England Governor Mervyn
King signaled the bank would need to lift rates further to
contain inflation. It's near its highest since 1992 versus the
yen, the currency of the country with the lowest interest rate of
the major economies.


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Dollar Drops to More Than Two-Week Low Against Euro on Bernanke's Comments

(Bloomberg) -- The dollar dropped to a more than
two-week low against the euro as Federal Reserve Chairman Ben S.
Bernanke said a slowdown in housing construction will remain a
drag on economic growth ``somewhat longer'' than expected.

The U.S. currency also dropped against the yen and pound as
Bernanke said tighter lending standards for mortgages will
``restrain'' housing demand. The dollar fell earlier on
speculation the European Central Bank and the Bank of England
will signal higher interest rates at meetings this week,
increasing the value of local currencies.


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