The pound slipped to the lowest level in more than a week against the dollar after a government report showed the U.K. sank deeper into recession last year than economists forecast. The decline put the British currency on course for its third quarterly loss versus its U.S. counterpart as gross domestic product in the fourth quarter fell 1.6 percent from the previous three months, a faster drop than in a Bloomberg News survey. That exceeded the previous estimate of a 1.5 percent contraction. The pound also retreated as some European stock markets fell, sapping demand for riskier assets. “The data reinforced the weaker trend in sterling,” said Marcus Hettinger, head of currency research in Zurich at Credit Suisse Group AG, the second-largest Swiss bank. “There’s still more downside for the pound.” The pound dropped to $1.4315 by noon in London, after slumping to $1.4269, the lowest level since March 19. It weakened 2.3 percent to 139.37 yen. It gained to 93.10 pence per euro, from 93.59 yesterday and 93.89 a week ago. The pound may drop to 95 pence in the next week, Hettinger said. Sterling fell as separate data showed the current-account deficit was higher than forecast in the fourth quarter, narrowing to 7.6 billion pounds, from a revised 8.2 billion. A current-account gap represents money the U.K. has to borrow overseas to pay for the goods and services it imports, and to finance investment not covered by local savings. ‘Bleak’ Prospects House prices in Europe’s second-biggest economy dropped in February by 2 percent on the month and 16.5 percent in the year, the Land Registry said today, adding to signs the economic slump is worsening. The British economy’s short-term prospects are “bleak,” Bank of England Chief Economist Spencer Dale said at a conference in London today. “The outlook for the current quarter, sadly, appears to be no better” than the fourth quarter, John Anderson, a portfolio manager at Rensburg Fund Management in London, said in a Bloomberg Television today. The MSCI World Index of equities fell 0.6 percent, paring its weekly gain. The U.K. FTSE 100 Index slipped 0.3 percent and U.S. stock futures declined. “Equity markets are struggling to hold on to their gains and that explains some of the weakness in the pound,” said Neil Mellor, a currency strategist in London at Bank of New York Mellon Corp., the world’s biggest custodian of financial assets. The U.K. currency may trade between $1.35 and $1.40 in three months, Mellor said. Failed Auction The pound dropped 2.5 percent versus the dollar in the past three days after the U.K. failed to find buyers for all of the 1.75 billion pounds of bonds it offered March 25, the first time that has happened in almost seven years. The remaining 187 million of securities won’t be offered until at least April 6, the London-based Debt Management Office said today. The DMO, which manages bond auctions on behalf of the Treasury, is scheduled to sell 5.75 billion pounds of bonds maturing 2015 and 2039 next week. Government bonds rose, pushing the yield on the 10-year gilt two basis points lower to 3.29 percent. The 4.5 percent security due March 2019 gained 0.18, or 1.8 pounds per 1,000- pound face amount, to 110.19. The yield was at 3.02 percent at the end of December. The yield on the two-year note held at 1.28 percent. Bond yields move inversely to prices.

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