The pound snapped a two-day advance against the dollar before a report economists said will show retail sales fell this month, buoying the case for the Bank of England to extend asset purchases. The currency fell from its strongest level since March 1. Bank of England policy maker David Miles said yesterday that spare industrial capacity will weigh on Britain’s “very muted� domestically generated inflation pressures, while the central bank said in a quarterly bulletin that investors remained concerned the euro-area outlook may dent financial market sentiment. U.K. government bonds advanced. The pound slipped 0.1 percent to $1.5949 at 8:13 a.m. London time. It climbed yesterday to $1.5974. Sterling was little changed at 83.63 pence per euro. A gauge of annual sales growth fell to minus 5, from minus 2 in February, the London-based Confederation of British Industry will say today, according to the median estimate of 11 economists surveyed by Bloomberg News. Demand for investments “perceived to be more liquid or carrying less credit risk� helped to keep gilt yields low, the Bank of England said in its Quarterly Bulletin. There was “little market reaction� to the decision by Moody’s Investors Service to change the outlook on the U.K.’s Aaa credit rating to negative from stable. The 10-year gilt yield fell four basis points to 2.29 percent. Sterling has dropped 0.7 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar slid 2.6 percent and the euro weakened 0.3 percent. To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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