The pound fell to the lowest in more than a week against the dollar as a report showed U.K. producer inflation slowed to the least since September, limiting the scope for higher interest rates. Sterling climbed against the euro. The rate of price growth for goods leaving U.K. factories increased 0.1 percent last month in June from May, when it rose 0.2 percent, the Office for National Statistics said today. The Bank of England left its benchmark interest rate at a record-low 0.5 percent yesterday and maintained its bond-purchase program to help support the U.K. recovery. The PPI data “is still seen as adding to the Bank of England’s policy dilemma and thus remains less supportive for sterling,” said Valentin Marinov, a currency strategist at Citigroup Inc. in London. The pound fell as much as 0.2 percent to $1.5939, the weakest intraday level since June 28, before trading at $1.5961 as of 10:12 a.m. in London. Sterling added 0.4 percent to 89.55 pence per euro and was little changed at 129.80 yen. Britain’s currency has lost 3 percent this year against a basket of nine developed-market currencies tracked by Bloomberg Correlation-Weighted Currency Indexes, as worsening economic growth limits the Bank of England’s ability to raise interest rates. Ten-year gilts rose for a fourth day in five, lowering yields by three basis points to 3.27 percent. The yield on two- year notes dropped one basis point to 0.79 percent. Investors are now betting that the Bank of England won’t raise borrowing costs until June next year, data from Tullett Prebon Plc on forward contracts for the sterling overnight interbank average, or Sonia, show. As recently as February, the data indicated traders were betting on a rate increase this May. To contact the reporter on this story: Garth Theunissen in London gtheunissen@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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