BLBG: Pound Ends Five-Day Gain Versus Dollar on Qatar Barclays Sale
By Morwenna Coniam
Oct. 20 (Bloomberg) -- The pound snapped a five-day gain against the dollar after Qatar Holding LLC said will sell 379 million shares in Barclays Plc, Britain’s second-biggest bank.
The U.K. currency also dropped against the euro after the Doha-based arm of the Qatar Investment Authority said it’s halving its stake in Barclays following an almost quadrupling in the share price in the past eight months. Britain had the biggest budget deficit for any September since records began in 1993, the Office for National Statistics said in London today.
“From a flow perspective, an outflow of this type is obviously going to be sterling negative,” said Ian Stannard, a currency strategist at BNP Paribas SA in London. “If they are selling a U.K. asset and receiving sterling, and they then repatriate that capital back, they will be selling sterling.”
The pound was at $1.6413 as of 12:03 p.m. in London, having fallen as much as 0.4 percent to $1.635 earlier, from $1.6421 yesterday. Sterling weakened to 91.19 pence per euro after depreciating by as much as 0.5 percent earlier to 91.52 pence, from 91.10 pence yesterday.
The U.K. government deficit rose to 14.8 billion-pounds ($23.5 billion), the biggest on record for a September, compared to a shortfall of 8.7 billion pounds a year earlier, as the recession ravaged tax revenue and drove up welfare costs. The median of 17 forecasts in a Bloomberg News survey was for 15.5 billion pounds.
Bean Speech
Bank of England Deputy Governor Charles Bean said today that expectations for the U.K. economy should stay “moderate” for a “protracted period”, the Scotland-based Press and Journal said today, citing people who attended a speech in Inverness yesterday. The Bank of England said the newspaper report should only be seen as an interpretation of Bean’s remarks and would not confirm the accuracy of the comments.
Sterling declined 6.6 percent against the euro since June, having gained 12 percent in the first half, amid concern policy makers would continue their program of buying assets to stimulate the economy.
The yield on the 10-year gilt fell 2 basis points to 3.58 percent. The 4.5 percent security due 2019 rose 0.14, or 1.4 pounds per 1,000-pound face amount, to 107.24. The two-year yield also slid 2 basis points, or 0.02 percentage point, to 0.84 percent.
