Pound bulls to profit

Rally wariness

“The decline that we’ve seen in euro-sterling since Carney made his comments about a potential rate hike have probably been a little more significant than we’ve seen in the past, without any consolidation or correction,” Barrow said by phone on July 16. “That’s the only thing that makes me wary.”

A technical measure called a diagonal triangle gauge shows further gains in the pound versus the dollar may be unlikely. Sterling started forming this triangle with its low of $1.6252 on Feb. 5, and it now implies a decline after the currency touched an almost six-year high of $1.7192 on July 15.

Britain’s currency will advance more than 1 percent against the euro by year-end, according to the median forecast of 55 strategists surveyed by Bloomberg, while another poll predicts a drop versus the dollar of about the same amount.

Speculation about higher interest rates, which should support sterling against both the dollar and euro, has been stoked by Britain’s accelerating inflation and a slide in unemployment.

Consumer prices rose 1.9 percent in the year ending June, approaching the BOE’s 2 percent target, while the jobless rate fell to a 5 1/2-year low of 6.5 percent in the three months through May, adding to signs of a recovery in Europe’s third- biggest economy.

BNP Paribas SA, France’s largest bank, predicts the pound will climb to 76 pence per euro by year-end, and sees it little changed at $1.71.

Euro-sterling is “probably where you get most bang for your buck,” Kiran Kowshik, a foreign-exchange analyst at BNP Paribas in London, said by phone on July 16.

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