The pound appreciated to a six-week high against the euro, climbing for a sixth day amid growing speculation that the Bank of England won’t extend its asset- purchase program, known as quantitative easing. Sterling was little changed against the dollar. The central bank, led by Governor Mervyn King, yesterday unveiled higher predictions for inflation next year and said prices are equally likely to exceed or undershoot the 2 percent target over two years. The bank said it “stood ready to respond in either direction.” “The pound is still enjoying some tailwinds from the inflation report,” said Geoffrey Yu, a foreign-exchange strategist at UBS AG in London. “There was selective reading of the report. When Mervyn King said there are strong upside and downside risks, people just read the first part of the sentence.” The pound strengthened 0.3 percent to 85.22 pence per euro at 8:16 a.m. in London, after appreciating to 85.13, the strongest since Sept. 28. It gained 0.1 percent against the dollar to $1.6140. U.K. government bonds rose, pushing the 10-year yield down three basis points to 3.14 percent. The two-year note yield fell two basis points to 0.97 percent ahead of an auction of 2 billion pounds ($3.2 billion) of 2034 bonds. 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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