The pound surge near its best point since January against the dollar as an industry report showed construction developed for a fifth month in September, increasing the evidence that the U.K. economy is progressing. Britain’s currency soared versus most of its 16 major counterparts after the data showed homebuilding recorded its strongest growth for a decade. Sterling has skyrocketed 7.8 percent in the past six months, making it the best mover among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, as an improving outlook triggered bets the Bank of England will hike borrowing costs sooner than it has predicted. Gilts were slightly altered. Residential Growth An index of building activity was 58.9 from a record-high 59.1 in August, Markit Economics said today in London. The gauge has been above 50, the level separating expansion from contraction, since May. The median estimate of economists in a Bloomberg News survey was for a gain to 59.5. ‘Positive Flow’ Investors may be reacting to “the positive flow of economic data since the start of August” that’s been “consistently stronger than market expectations,” Bank of England Markets Director Paul Fisher said in a speech in London today. A link between U.S. and U.K. short rates may be overdone and is “unhelpful given the relatively subdued recovery in the U.K.,” Fisher said. “It may well be the case that these rates decouple in future as liquidity improves and the outlook for each economy develops further.” The yield on 10-year gilts were little changed at 2.71 percent after sliding to 2.67 percent on Sept. 30, the lowest level since Aug. 27. The price of the 2.25 percent security maturing September 2023 was at 95.995. Gilts relinquished 2.7 percent this year through yesterday, according to Bloomberg World Bond Indexes. German bonds retreated 1.6 percent and Treasuries pulled back 2.5 percent.
