The pound headed for its fourth weekly decline against the dollar on speculation a deteriorating economic outlook will spur the Bank of England to introduce additional monetary stimulus. Sterling approached an eight-month low versus the greenback reached on Sept. 14 after reports this week showed U.K. retail sales fell, jobless claims rose and inflation accelerated. Business Secretary Vince Cable called for further monetary stimulus, or quantitative easing, and recommended the use of “creative mechanisms” that go beyond the purchase of government bonds. Gilts were poised for a weekly decline. “This week’s data has not been supportive of sterling,” said Audrey Childe-Freeman, global head of currency strategy in London at the private-banking unit of JPMorgan Chase & Co. “The U.K. is facing continual inflationary pressure in a stagnant economic environment, and that’s never great for the currency. There is growing sentiment in the market that there will be further QE.” The pound was little changed at $1.5797 at 12:49 p.m. in London, leaving it with a decline this week of 0.5 percent. Sterling strengthened 0.5 percent versus the euro to 87.35 pence, snapping a four-day loss and paring its weekly drop to 1.6 percent. Chancellor of the Exchequer George Osborne and Deputy Prime Minister Nick Clegg have emphasized the possibility of further monetary easing to help revive Britain’s economy. Bank of England policy maker Adam Posen called on Sept. 13 for the central bank to buy as much as 100 billion pounds in securities within three months and said officials’ delay in acting has made economic prospects “worse.” Blanchflower View The Bank of England and the Federal Reserve will embark on further quantitative-easing measures by November, David Blanchflower, a professor at Dartmouth College and a former member of the BOE’s Monetary Policy Committee, said yesterday at the Bloomberg Markets 50 Summit in New York. Gilts were little changed, with 10-year yields at 2.52 percent and the price at 110.81. The yield has climbed six basis points this week. The central bank’s quantitative-easing program, currently worth 200 billion pounds, remains the preferred tool to stimulate demand, Cable wrote in a pamphlet published before the Liberal Democrats’ annual party conference starting Sept. 17. U.K. inflation accelerated for a second month in August, reaching 4.5 percent from a year earlier, compared with 4.4 percent in July, the Office for National Statistics said on Sept. 13. A report the following day showed public-sector employment fell by a record in the second quarter while jobless- benefit claims increased by 20,300 in August amid the biggest fiscal squeeze since World War II. 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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