The pound rose for a fourth week against the dollar as it advanced to the highest in more than two years after data from gross domestic product to mortgage approvals added to signs U.K. economic growth is accelerating.
The surprise decision by the European Central Bank to cut interest rates means there’s now about an even chance that the euro, this year’s best-performing major currency, will erase all of its gains in a matter of months.
The euro’s unexpected rally this year is spurring a jump in hedging as the currency’s strength threatens to damp earnings at companies from Deutsche Lufthansa AG to luxury-goods maker LVMH Moet Hennessy Louis Vuitton SA.
The dollar may rise after today’s meeting of the U.S. Federal Open Markets Committee, as policy makers “open the door” to further monetary easing without taking any immediate action, said Henrik Gullberg , a currency strategist at Deutsche Bank AG in London.
Investors who bet on lira bonds using the carry trade this month are making the region’s third- biggest returns as speculation mounts the Federal Reserve will delay the start of scaling back monetary stimulus.
Norway’s krone will gain further as investors “desperate” for protection against a deepening European debt crisis turn to one of the few haven markets that isn’t overvalued, said Deutsche Bank AG, the world’s biggest currency trader.