Thousands demonstrated late yesterday near the Spanish Parliament, the same site where police detained and clashed with protesters the night before. Prime Minister Mariano Rajoy risks renewed criticism today when the cabinet approves the 2013 budget and presents measures to bolster the shrinking economy.
Ministers are due to give a press conference this afternoon following a meeting. The draft law will be presented to Parliament on Sept. 29.
“These worries in Europe that have flared over the past couple of days will just get people maybe looking to buy sterling a little bit,” said Paul Robson, a senior foreign- exchange strategist at Royal Bank of Scotland Group Plc in London.
The pound has strengthened 2.1 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro tumbled 3.4 percent and the dollar weakened 2.6 percent.
The 10-year gilt yield climbed three basis points, or 0.03 percentage point, to 1.73 percent after dropping as much as 14 basis points yesterday, the most since May 30. The 1.75 percent bond due in September 2022 fell 0.295, or 2.95 pounds per 1,000- pound face amount, to 100.225.
Gilts returned 3.6 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds also gained 3.2 percent and U.S. Treasuries rose 2.4 percent.