The pound fell as minutes from the Bank of England’s May 5 meeting showed the majority of policy makers warned against raising borrowing costs, and a report revealed unemployment claims rose. Sterling weakened against all 16 of its major peers, losing most against Sweden’s krona. At the central bank’s May meeting, the Monetary Policy Committee voted 6-3 to hold interest rates at 0.5 percent as members said an increase “could adversely affect consumer confidence.” U.K. unemployment claims rose in April at the fastest pace since January 2010, according to a separate report. “If the data continues to be pretty soggy we could see more MPC members moving back to vote for unchanged rates,” which may cause the pound to weaken, said Gavin Friend, a markets strategist at National Australia Bank Ltd. in London. The pound depreciated 0.7 percent against the euro to 88.21 pence as of 12:33 p.m. in London. It reached 88.25 pence, the weakest since May 6. It was 0.7 percent lower at $1.6147 and dropped 0.9 percent to 131.09 yen. Jobless benefit claims increased by 12,400 from March to 1.47 million, the Office for National Statistics said today in London. The median forecast of 24 economists in a Bloomberg News survey was for no change. Unemployment measured by International Labour Organization methods fell by 36,000 to 2.46 million people in the quarter through March. 6-3 Vote Of the central bank’s nine policy makers, Andrew Sentance maintained his call for a half percentage-point increase in the key rate from a record low of 0.5 percent. Chief Economist Spencer Dale and Martin Weale continued a push for a quarter- point increase. They said the case for a move now was “finely balanced” according to the minutes. Governor Mervyn King and the other five members of the Monetary Policy Committee voted for no change. Adam Posen kept up a call for more bond purchases. “There’s quite an important change in the tone of the minutes,” said Chris Walker, a currency strategist at UBS AG in London. “Dale and Weale both said that their decision was finely balanced, implying they are becoming less hawkish. It’s bearish for the pound because the voting dynamics make a hike less likely.” Money markets now price in a 25 basis-point increase in the key rate in January, according to sterling overnight interbank average forwards, Tullett Prebon Plc data show. They have pushed back bets for a rate rise as soon as this month. U.K. consumer prices rose 4.5 percent last month from a year earlier, according to a report yesterday, surpassing the economists’ median forecast of 4.1 percent. Gilts were little changed, with the yield on the 10-year bond 3.36 percent, while two-year note yields were at 0.99 percent. To contact the reporter on this story: Emma Charlton in London at echarlton1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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