Pound Advances to 26-Year High Versus Dollar on GDP Report, Rates Outlook

(Bloomberg) -- The pound rose to a 26-year high
against the dollar after a report showed U.K. economic growth
unexpectedly quickened in the second quarter, stoking
expectations of higher interest rates.

The U.K. currency headed for its longest rally in more than
a year on speculation the Bank of England will raise rates half a
percentage point from 5.75 percent by year-end while the Federal
Reserve stays on hold. The pound also advanced as the Fed trimmed
its forecast for economic growth and Bear Stearns Cos. reported
losses on hedge funds that bet on bonds backed by subprime loans.


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Pound Heads for Sixth Weekly Gain After GDP Report Stokes Rate Expectation

(Bloomberg) -- The pound headed for its longest
rally versus the dollar in more than a year after a report showed
U.K. economic growth unexpectedly quickened in the second
quarter, stoking expectations of higher interest rates.

The U.K. currency rose to a 26-year high this week on
speculation the Bank of England will raise rates half a
percentage point from 5.75 percent by year-end while the Federal
Reserve stays on hold. The pound also advanced as the Fed trimmed
its forecast for economic growth and Bear Stearns Cos. reported
losses on hedge funds that bet on bonds backed by subprime loans.


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Pound Rises to Near 26-Year High Against Dollar After GDP Report, on Rates

(Bloomberg) -- The pound rose to near a 26-year high
against the dollar after a report showed U.K. economic growth
unexpectedly quickened in the second quarter, stoking
expectations of higher interest rates.

The U.K. currency headed for a sixth weekly gain on
speculation the Bank of England will raise rates half a
percentage point by year-end while the Federal Reserve stays on
hold. The pound advanced this week as the Federal Reserve trimmed
its forecast for economic growth and Bear Stearns Cos. reported
losses on hedge funds that bet on bonds backed by subprime loans.


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Dollar Gains Most Against Yen in More Than a Week on U.S. Job Growth

(Bloomberg) -- The euro rose to an all-time high
against the yen and gained versus the dollar as rising global
interest rates prompted Japanese investors to buy assets abroad.

The yen fell against all 16 of the most-actively traded
currencies as Japan's 0.5 percent interest rate, the lowest among
developed nations, encouraged investors to borrow in the country
for higher returns overseas in a practice known as the carry
trade. The Bank of England yesterday lifted borrowing costs a
quarter-percentage point to a six-year high of 5.75 percent.


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Euro Rises to All-Time High Against Yen Before ECB Interest-Rate Meeting

(Bloomberg) -- The euro rose to an all-time high
against the yen and traded near a record versus the dollar on
prospects the European Central Bank will signal plans to raise
its benchmark interest rate at least once more this year.

The euro has gained 3.2 percent versus the dollar in 2007 as
the spread between German and U.S. two-year notes declined to the
narrowest in 2 1/2 years. ECB President Jean-Claude Trichet today
may keep borrowing costs at a six-year high and suggest further
increases. The pound was near a 26-year high against the dollar
on speculation the Bank of England will raise rates today.


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Bank of England May Raise Benchmark Rate a Fifth Time to Quell Inflation

(Bloomberg) -- The Bank of England may raise its
benchmark interest rate for the fifth time in a year today to
bring inflation under control, a survey of economists shows.

The nine-member Monetary Policy Committee, led by Governor
Mervyn King, will increase the Bank Rate a quarter-point to 5.75
percent, the highest since April 2001, according to 53 out of 60
economists surveyed by Bloomberg News. The remainder forecast no
change. The bank will announce the decision at noon in London.


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Dollar near 26-year low vs pound before BoE and ECB

(Reuters) - The dollar stayed near a 26-year low against sterling and a two-month trough versus the euro on Thursday as investors awaited interest rate decisions by the European Central Bank and Bank of England later in the session.

The euro approached an all-time high against the yen on expectations that the European Central Bank President Jean-Claude Trichet will reinforce market views for higher rates even as the central bank is seen standing pat for now at 4.0 percent.


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Euro Trades Near Record High Versus Dollar, Yen Before ECB Policy Meeting

(Bloomberg) -- The euro traded near a record high
against the dollar and the yen on bets the European Central Bank
will signal at least one more interest-rate increase this year.

The ECB, which economists expect will hold rates at 4
percent today, may say policy is still accommodative and
inflation is a concern. The euro has gained 3.2 percent versus
the dollar this year as the spread between German and U.S. two-
year notes declined to the narrowest in 2 1/2 years. The British
pound was close to the strongest in 26 years on speculation the
Bank of England will lift borrowing costs today.


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Pound Rises to 26-Year High Against Dollar as Rate Advantage Set to Widen

(Bloomberg) -- The U.K. pound rose to a 26-year high
against the dollar on expectations the Bank of England will keep
raising interest rates, boosting the country's yield advantage.

The pound climbed the most against the dollar in a month
before a central bank meeting this week at which policy makers
are forecast to raise rates a quarter-point to a six-year high
of 5.75 percent. In contrast, the U.S. Federal Reserve held its
benchmark borrowing cost at 5.25 percent last week.


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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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Yen stays weak, tankan bolsters BOJ rate view

(Reuters) - The yen fell against the dollar and euro after the BOJ's quarterly tankan poll came in line with forecasts, but trimmed losses as investors were careful about selling the yen too much ahead of a holiday-shortened week in the United States.




Sterling hit a 2 1/2-month high versus the dollar at $2.01, inching near a 26-year high before the Bank of England holds a policy meeting later in the week, when it is expected to lift rates by 25 basis points to 5.75 percent.


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Bank of England's Jenkinson Warns on Weaknesses Shown by Subprime Fallout

(Bloomberg) -- The U.S. subprime lending crisis has
shown weaknesses in risk controls which could affect the whole
financial system in the event of a bigger shock to deeper markets
such as corporate credit, a Bank of England official said.

``Recent distress in the U.S. subprime lending market'' has
``exposed weaknesses in risk management,'' Nigel Jenkinson, the
bank's executive director for financial stability, said today.
``In a more severe stress scenario, perhaps in a more significant
market such as corporate credit,'' the effect ``could have more
serious consequences for the financial system.''


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Pound Little Changed Vs Dollar; Yesterday's Rally Viewed as Excessive

(Bloomberg) -- The U.K. pound traded little changed
against the dollar as traders judged its rise to an eight-week
high yesterday was excessive.

The pound broke through the $2 barrier yesterday for the
first time since May 2 as investors bet Bank of England Governor
Mervyn King will this week tell lawmakers interest rates need to
rise further to cap inflation. Futures traders have raised bets
the U.K. currency will rise, pushing so-called net long positions
to a four-month high.


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U.K. Pound Gains to 4-Month High Versus Euro on Speculation Rates 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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Banks, commodities boost FTSE amid global rally

(Reuters) - The UK's leading share index advanced on Wednesday, as commodities and banks helped European stocks keep up with a global rally and as the market shrugged off minutes from the Bank of England's June meeting.

Financial stocks extended their overnight gains on Wall Street, with Man Group, the world's largest listed hedge-fund company rising 1.9 percent.


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Bank of England Raises Concern About Lenders Easing Credit Conditions

(Bloomberg) -- The Bank of England said it's
concerned that lenders are easing credit restrictions as financial
companies compete to benefit from the fastest global growth in
more than three decades.

``Lenders reportedly continued to compete aggressively for
business on non-price terms, driving lending standards down
further,'' the U.K. central bank said in its quarterly bulletin
today. As a result of lower standards, the quality of covenants,
loan conditions that give lenders added protection, is also
deteriorating, the bank said.


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U.K. Pound Gains Before Bank of England Minutes Back Case for Higher Rates

(Bloomberg) -- The pound rose to the highest in more
than a week against the dollar on speculation the minutes of the
Bank of England's last meeting will reinforce the case for higher
interest rates.

Since the June 7 meeting, Governor Mervyn King and policy
maker Paul Tucker have again expressed concern about inflation,
underpinning expectations of an increase in borrowing costs. The
BOE will release the minutes on June 20. The pound also gained as
accelerating house prices added to the case for higher rates.


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Pound Gains for First Week in Three Amid Speculation U.K. Rates Will Climb

(Bloomberg) -- The pound gained for the first week
in three on speculation the Bank of England will need to keep
raising interest rates to slow the economy.

BOE Governor Mervyn King this week said the bank ``may need
to take further action'' to contain inflation, a week after it
boosted the main lending rate to a six-year high. Monetary Policy
Committee member Paul Tucker said in a speech yesterday a pickup
in money growth is an ``amber light'' for future inflation.


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