The pound spiked to an eight-month high against the dollar as Lawrence Summers backed down from the race to be the next leader of the Federal Reserve, shutting down bets he would undo the central bank’s policies aimed at holding down borrowing costs. U.K. government bonds marched up with U.S. Treasuries, pulling down the 10-year gilt yields to the weakest mark in more than a week. Summers, an ex Treasury secretary, would tighten Fed policy more than Janet Yellen who was his main opponent to succeed Chairman Ben S. Bernanke, according to a Bloomberg Global Poll last week. Sterling was about 0.3 percent from its best position against the euro since January as Rightmove Plc lifted its prediction for progress in U.K. house prices this year. Fed Tapering The Fed is purchasing $85 billion a month of Treasuries and mortgage-backed securities to put downward pressure on long-term borrowing costs. Policy makers will decide to slow purchases to $75 billion at a two-day meeting. according to a Bloomberg News survey of economists on Sept. 6. Forecast Raised U.K. home prices will soared 6 percent this year against the 4 percent previously calculated, Rightmove said in a report. House prices sought slide down 1.5 percent nationally and in London in September, the property-website operator said. The pound has skyrocketed 6.9 percent in the past six months, the best mover among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar hiked 0.8 percent and the euro advanced 3.2 percent. The U.K. currency has strengthened at least 1 percent against all 31 of its most-traded peers in the past six months, setting a four-year high against the yen and touching records against the Turkish lira and Indian rupee. The benchmark 10-year gilt yield relinquished four basis points, or 0.04 percentage point, to 2.87 percent after reaching 2.85 percent, the lowest since Sept. 4. The 2.25 percent security due in September 2023 rose 0.365, or 3.65 pounds per 1,000-pound face amount, to 94.66. The rate on similar-maturity U.S. notes backed down nine basis points to 2.80 percent. Gilts missed 4.5 percent this year through Sept. 13, according to Bloomberg World Bond Indexes, underperforming German securities, which dropped 2.5 percent, and a 3.7 percent drop in Treasuries.
