By Kim-Mai Cutler Oct. 22 (Bloomberg) -- The pound slid to the lowest level in more than five years against the dollar after Bank of England Governor Mervyn King said Britain's worst banking crisis since World War I is likely to push the economy into a recession. The British currency also fell versus the euro as the National Institute of Economic and Social Research said the economy will suffer its first full-year contraction since 1991. Policy makers release minutes today from their latest meeting on interest rates last month. ``The pound is under pressure,'' said Hans-Guenter Redeker, London-based global head of currency strategy at BNP Paribas SA. ``The Bank of England may have to take interest rates to 2 or 2.5 percent.'' The pound may weaken to $1.55 by the beginning of 2010, Redeker said. The U.K. currency fell to $1.6260 as of 6:35 a.m. in London, the lowest level since September 2003, from $1.6706 yesterday. Against the euro, the pound weakened to 78.92 pence, dropping for a third day, from 78.16 pence. The pound may drop 4.2 percent against the dollar, said Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc., citing charts used to predict price movements. ``After a correction higher, prices have weakened again, turning the short-term momentum bearish,'' Edgeley wrote in a research note yesterday. The pound closed below $1.7045 yesterday, opening up ``a target around $1.60,'' he wrote, citing weekly and monthly stochastic and trend strength indicators. House prices will continue to fall and the pound may depreciate further, King said yesterday in a speech to executives in Leeds, England, his first explicit acknowledgement that a U.K. recession is likely. To contact the reporter on this story: Kim-Mai Cutler in London at kcutler@bloomberg.net

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