The pound traded near its weakest in a week against the dollar before a Bank of England inflation report that may indicate a slowing in the U.K. recovery as budget cuts cramp growth. The central bank will present its first economic forecasts since the government announced plans to slash spending. The International Monetary Fund yesterday said the bank should maintain emergency stimulus for the economy to offset the cuts. “We had rumors yesterday that the report was out and the Bank of England was going to have a dovish bent, but there has been no confirmation of that,” said Jane Foley, a senior currency strategist at Rabobank International in London. “What we’re going to get is confirmation of the view inflation will fall below target by the end of their forecast period, and that view was given credence yesterday by the IMF as well.” The pound was little changed at $1.5986 at 8:22 a.m. in London, after falling to 1.5952 yesterday, the lowest since Nov. 2. It gained against the euro, dropping 0.2 percent to 86.29 pence. Central bank officials this month held their bond-purchase plan at 200 billion pounds ($320 billion) as the strength of the U.K. recovery persuaded them to hold off a further round of so- called quantitative easing. U.K. government bonds fell, pushing the 10-year yield up one basis point to 3.05 percent. The two-year note yield rose one basis point to 0.72 percent. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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