Executive Summary

This International Financial news has been taken from the website www.bloomberg.com. This news refers to our topic The Exchange Rate and BOP. The demand of Pound increases due to rapid increase in production in UK as compared to dollar. There will be 3 scenarios as we understand to summarize this news because we have not access to all data, so as per our knowledge that our Respected Sir has given us in International Finance class, we summarize this news as:

The Home Currency of UK [Pound appreciates] as compared to Foreign Currency which is Dollar. This is due to Demand and Supply that changes the Exchange Rate. This is also due to increase in Production in UK. So, there will be more exports that have a positive impact on BOP. Due to production, more Pounds will be required for raw materials; this will also impact on exchange rate.

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The Complete Details of News Article

Pound Climbs for Third Day versus Dollar as Production Expands

The pound advanced for a third day against the dollar after a government report showed U.K. industrial production increased more in September than economists forecast. Sterling reached the strongest level in almost five weeks versus the euro after Halifax said British house prices climbed for the ninth month in October, adding to signs the recovery is gaining momentum. The pound will struggle to extend gains after its recent rally, according to Bank of Tokyo-Mitsubishi UFJ Ltd. U.K. government bonds were little changed before the Bank of England announces a policy decision tomorrow. Theres capacity to push a bit higher against the dollar, said Jane Foley, a London -based senior currency strategist at Rabobank International. Theres so much good news in the price so it will be difficult to sustain gains much above $1.61. The pound gained 0.2 percent to $1.6073 at 4:29 p.m. London time after rising to $1.6118, the highest level since Oct. 29. The U.K. currency dropped 0.2 percent to 84.11 pence per euro after appreciating to 83.79 pence, the strongest since Oct. 3. Sterling has rallied 4 percent in the past six months, the best performer of 10 developednation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro climbed 3.9 percent and the dollar advanced 0.1 percent.

Output Increases

Industrial output jumped 0.9 percent from August, when it fell 1.1 percent, the Office for National Statistics said. The median forecast of economists surveyed by Bloomberg News was for an increase of 0.6 percent. Home values climbed 0.7 percent, the biggest gain in three months, according to Halifax, the mortgage unit of Lloyds Banking Group Plc. The Bank of England will keep its key interest rate at a record-low 0.5 percent tomorrow and its asset-purchase stimulus target at 375 billion pounds, according to Bloomberg surveys of economists. Governor Mark Carney will present new quarterly forecasts on Nov. 13.

The central bank is likely to raise its estimate for this years economic product growth toward 1.6 percent from 1.3 percent, Lee Hardman, a currency strategist at Bank of TokyoMitsubishi UFJ in London, wrote in a note to clients. The pound has outperformed, Hardman wrote. However with the first BOE rate hike still appearing some way off, the pound will still likely struggle to strengthen materially in the near term.

Improving Outlook
The U.K. outlook has improved substantially, the European Commission said yesterday. The Brussels-based group said gross domestic product will grow 1.3 percent this year and 2.2 percent next year, more than it previously projected. The benchmark 10-year gilt yield was at 2.71 percent after rising to 2.74 percent yesterday, the highest since Oct. 22. The price of the 2.25 percent bond due in September 2023 was 96.02. Ten-year yields will climb to 2.90 percent by year-end, according to the median estimate in a Bloomberg survey of 26 analysts. The median was 2.75 percent in September. Gilts handed investors a loss of 2.8 percent this year through yesterday, according to Bloomberg World Bond Indexes. Treasuries fell 2.4 percent and German bonds slid 1.3 percent.

Financial News Website Link

http://www.bloomberg.com/news/2013-11-06/pound-advances-for-third-day-before-u-k-industrialoutput-data.html .

Financial News Taken from Website:

www.bloomberg.com