The pound rose the most in a week versus the euro as U.K. manufacturing grew for a third month in August, while German industrial output shrank, adding to signs Britain’s recovery is outpacing that in Europe.
Sterling was little changed against the dollar after posting its biggest advance in two weeks yesterday. The U.K. currency appreciated from near a two-week low versus the euro as German industrial production fell the most since 2009 in August. U.K. government bonds rose for a second day as the Debt Management Office sold 30-year gilts at the lowest yield since September 2012.
“The divergence between the U.K. and the euro zone is still there, has been the dominant story for a while and it will be for some time to come,” said Jane Foley, senior foreign-exchange strategist at Rabobank International in London. “The slower data has had an impact, but at the same time the market has been getting more excited about quantitative easing from the European Central Bank, so that’s why that divergence story is still there.”
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