The pound dropped from a seven- month high against the dollar after the U.K. economy unexpectedly slipped back into recession, backing the case for the Bank of England to extend its asset-purchase program.
U.S. stocks rose, with the Standard & Poor’s 500 Index and the Dow Jones Industrial Average closing at records, as jobless claims unexpectedly fell and measures of consumer confidence beat estimates. Treasuries dropped while crude oil tumbled as a report showed U.S. supplies climbed.
For all his success in driving the yen down by the most in 16 years, Bank of Japan Governor Masaaki Shirakawa is under pressure from local companies to weaken the currency even more, while traders anticipate a rebound.
The dollar rose to a six-month high against the yen as an unexpected drop in U.S. jobless claims and a rise in leading economic indicators added to speculation the Federal Reserve may start reducing stimulus next month.
The pound advanced versus the dollar after the future Bank of England Governor Mark Carney said the U.K.’s monetary policy may be enough to help the economy, damping speculation that he would expand stimulus.
The pound approached the strongest level in a month against the euro after an industry report showed British banks boosted mortgage approvals in June, adding to evidence the recovery is gathering pace.