The pound weakened against the dollar and the euro before Bank of England policy makers meet to decide on interest rates and asset purchases amid signs the economic recovery is floundering. Sterling weakened against all but two of its 16 major peers. The central bank should restart its debt-purchase program immediately to prevent the economy from slipping back into recession, the Institute of Directors said today. Policy makers will keep rates on hold at 0.5 percent according to all 57 economists in a Bloomberg news survey. All but one analyst in a separate survey say the bank will maintain so-called quantitative easing at 200 billion pounds ($319 billion). “Even without any action from the Bank of England, sterling probably will still look to trade lower” against the dollar, Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London, said in an interview yesterday. “If we were to see any action, clearly that will be a short-term sell signal.” Sterling depreciated 0.2 percent to 88.34 pence per euro at 8:28 a.m. in London, adding to yesterday’s 0.4 percent decline. The pound slipped 0.4 percent to $1.5931. It dropped to $1.5919 yesterday, the weakest level since Britain’s currency has weakened 7.5 percent in the past 12 months against a basket of nine major peers, according to Bloomberg Correlation-Weighted Currency Indexes, making it the second-worst performer after the dollar. U.K. two-year government notes opened higher, with the yield dropping two basis points to 0.56 percent. The 10-year yield was three basis points lower at 2.31 percent. -- Editors: Mark McCord, Nicholas Reynolds To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net; 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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