The pound declined to the weakest level in six months against the euro as U.K. consumer confidence and factory orders deteriorated, indicating the British economic recovery is struggling. The pound slipped against the 17-member common currency for the first week in three after a report by GfK NOP Ltd. showed consumer sentiment slumped to its weakest level since the depth of the recession in February 2009. Short-sterling futures rose for a fourth week as traders speculated the Bank of England will keep its benchmark rate at a record low to support the economy. “If you are a buyer of sterling, there’s no rush to do it, but we are reaching the kind of levels where it is starting to look like decent value,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London. The pound declined 0.6 percent in the week to 88.74 pence per euro as of 5:05 p.m. in London yesterday. It earlier slipped to 89.37 per euro, the weakest level since Oct. 25. Against the dollar, sterling gained 1.2 percent to $1.6701 as the greenback slumped against the majority of its peers. The Confederation of British Industry’s orders gauge slumped to minus 11 in April from plus five a month before, compared with the median estimate for a decline to plus two. The GfK index of consumer sentiment fell to minus 31 in April from minus 28 last month, while a separate report showed gross domestic product grew 0.5 percent after shrinking the same amount in the fourth quarter. BOE Rate Expectations Short-sterling futures rose in a week that saw just three days of trading due to national holidays, as traders pared bets the Bank of England will boost borrowing costs. The implied yield on the contract expiring in December has slipped 33 basis points this month. The pound has lost 1.3 percent against the euro since the European Central Bank raised its key rate for the first time in almost three years on April 7. U.K. government bonds gained in the week, pushing the yield on the 10-year gilt five basis points lower to 3.48 percent as of the close of trading on April 28. The two-year note yield dropped two basis points to 1.10 percent. Gilts trading was closed yesterday for a national holiday to celebrate the marriage of Prince William and Kate Middleton. Gilts have earned investors 2 percent this month, compared with a 1.2 percent return on U.S. Treasuries and 0.7 percent on German bonds, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. 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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