The pound declined from a two-week high against the euro as Bank of England policy maker Spencer Dale said it would take a long time until the U.K. economy was strong enough to justify higher interest rates.
Sterling extended losses versus the 17-nation currency after a German report showed business confidence in Europe’s biggest economy surged to the highest level in 19 months. While the U.K. is recovering, there’s still “a long way to go” before it has healed enough to withstand higher borrowing costs, Dale said in an interview on BBC Radio Merseyside. U.K. government bonds rose, paring a weekly decline.
“They are not in a rush to hike rates,” said Roberto Mialich, a senior currency strategist at UniCredit SpA in Milan. “This rally of sterling may be excessive and some correction might be on the cards while the euro should sustain gains.”
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