By Matthew Brown and Lukanyo Mnyanda Jan. 29 (Bloomberg) -- The pound traded within half a penny of its highest level against the euro since August after U.K. house prices jumped in January by the most in five months and a report showed consumer confidence improved. Sterling headed for weekly gains against the 16-nation European currency and the dollar. The average cost of a home increased 1.2 percent from the previous month, mortgage lender Nationwide Building Society said today. An index of consumer sentiment rose for the first time in three months, climbing more than economists predicted in a Bloomberg survey, data from London-based market researcher GfK NOP showed. “The data has generally outperformed very poor expectations, and the Nationwide report is a classic case,” said Neil Jones, head of European hedge-fund sales in London at Mizuho Corporate Bank Ltd. “I quite like the pound long term.” The pound strengthened 0.1 percent to 86.48 pence per euro as of 11:29 a.m. in London, bringing its gain for the week to 1.4 percent and 2.5 percent in January. The U.K. currency also climbed 0.1 percent to $1.6152, trimming its monthly drop to 0.1 percent. The yield on the 10-year gilt fell 1 basis point to 3.92 percent. The two-year note yield was little changed at 1.27 percent. Gilts have returned investors 0.6 percent this year, compared with 1.3 percent for German government bonds and U.S. Treasuries, according to indexes compiled by Bank of America’s Merrill Lynch unit.

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