The pound declined for a fourth day against the dollar as a report showed that growth in U.K. services slowed more than economists forecast in April and house prices fell. Sterling was little changed against the euro before the European Central Bank sets interest rates for the 17-nation currency area. A gauge of British services activity based on a survey of purchasing managers dropped to 53.3 from 55.3 in March, missing the median forecast of 54.1 in Bloomberg survey of economists. Ten-year gilt yields touched the lowest in more than two weeks as the U.K. sold inflation-linked bonds. “Sterling weakened as the latest data is consistent with a weak economic outlook,� said Harry Adams, a managing director at Argentex LLP, a London-based currency-advisory company. “Further declines may be limited given sterling is underpinned by haven demand as the euro-region crisis drags on.� The pound slipped 0.1 percent to $1.6186 at 11:32 a.m. London time. The four-day drop is the longest run of declines since November. The British currency rose to $1.6302 on April 30, the highest level since Aug. 31. The pound was at 81.17 pence per euro, after appreciating to 81.13 yesterday, the strongest level since June 2010. House Prices Sterling has appreciated 3.3 percent in the past three months, the best performer of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 0.7 percent and the euro climbed 0.5 percent. U.K. house prices fell last month as a tax break for first- time buyers ended and the economy entered a double-dip recession, Nationwide Building Society said today. Values slipped 0.2 percent from March, the fourth decline in five months. From a year earlier, prices fell 0.9 percent. Bank of England Governor Mervyn King said yesterday the economy isn’t yet “back to health� and will need the support of low interest rates “for the time being.� King also said inflation is “still too high.� Policy makers will say on May 10 whether they will extend their bond-buying program to aid the recovery. The yield on 10-year gilts was little changed at 2.04 percent, after falling to 2.02 percent, the least since April 16. It dropped to a record 1.917 percent on Jan. 18. Linkers Auction The Debt Management Office sold 1.2 billion pounds of inflation-protected bonds due in March 2034. The sale drew bids for 1.93 times the amount of the securities on offer, according to data from the debt agency. The U.K.’s 20-year break-even rate, the market gauge of inflation expectations derived from the yield difference between nominal and index-linked bonds, fell two basis points to 3.06 percentage points, and reached 3.05 points, matching the least since March 8. U.K. index-linked bonds lost investors 2 percent this year while their U.S. counterparts returned 2.9 percent, according to data compiled by Bank of America Merrill Lynch. Britain’s five-year, five-year forward break-even rate, a market gauge monitored by the Bank of England to forecast inflation expectations starting five years from now, fell to 2.99 percent, down from this year high of 3.54 percent on Feb. 9. The 12-month average is 3.24 percent. Gilts outperformed German bunds today, with all 58 analysts in a Bloomberg survey predicting the ECB will keep its benchmark rate unchanged at 1 percent. Ten-year U.K. bonds yielded 42 basis points more than German debt of the same maturity, compared with 45 basis points on April 30. Gilts have handed investors a loss of 1.2 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies, the second- worst performer after Greece among 26 sovereign indexes. U.S. Treasuries gained 0.2 percent and German bunds returned 1.6 percent, the indexes show. To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; Keith Jenkins in London at kjenkins3@bloomberg.net To contact the editors responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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