By Agnes Lovasz Nov. 5 (Bloomberg) -- The U.K. pound fell against the dollar on speculation Barack Obama's presidential victory and Democrat gains in Congress will speed policies aimed at easing the effects of the financial crisis. The British currency also dropped before an industry report that may show services industries contracted in October, adding to evidence the economy is in recession. The Bank of England will cut its benchmark interest rate by half a percentage point tomorrow to 4 percent, a Bloomberg survey showed. ``The discussion is not about whether there's going to be a rate cut, but whether it's going to be 50, 75 or 100'' basis points, said Audrey Childe-Freeman, a senior currency analyst at Brown Brothers Harriman & Co. in London. ``The initial reaction will be a sell-off, but the market may be ready to reward the central-banking community for being proactive.'' The pound dropped to $1.5825 as of 7:38 a.m. in London, from $1.5956 yesterday. Against the euro, the British currency snapped a three-day drop, strengthening to 81.15 pence, from 81.35 pence. Television networks projected at least 338 electoral votes for Obama to 145 for Republican rival John McCain, who conceded defeat. The Democrats won five Senate seats from the Republicans. Three weeks ago, Obama increased the proposed cost of his ``middle-class rescue plan'' to $175 billion from $115 billion. He will be able to seek support for stimulus spending when Congress returns in less than two weeks for a session under incumbent George W. Bush. Bonds Gain An index based on a survey of about 700 service companies by the Chartered Institute of Purchasing and Supply was at 44.5 last month, after a reading of 46 in September, Markit will say today, according to a Bloomberg survey. The measure has stayed below the 50-mark since May, signaling contraction. The release is due at 9:30 a.m. in London. U.K. government bonds rose yesterday, driving the yield on the two-year gilt down 7 basis points to 2.81 percent. The 4.75 percent security due June 2010 advanced 0.10 or 1 pound per 1,000- pound ($1,580) face amount, to 102.98, climbing for a fifth day. The 10-year note yield fell 2 basis points to 4.48 percent. Bond yields move inversely to prices. To contact the reporters on this story: Agnes Lovasz in London at alovasz@bloomberg.net;

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