The pound declined for a second day versus the dollar after an industry report showed U.K. services growth slowed more than economists forecast in October. Sterling weakened against most of its 16 major peers before the Bank of England holds a two-day meeting this week to decide whether to increase monetary stimulus through so-called quantitative easing, to boost growth. The pound erased gains versus the euro that took it to a five-week high. Government bonds rose for a second day. “The U.K. data seems to have knocked sterling this morning but I’d be wary of further weakness,� said Michael Derks, chief strategist at FxPro Group Ltd. in London. “The hurdle for more QE is reasonably high.� The pound weakened 0.3 percent to $1.5968 at 11:41 a.m. London time after rising to $1.6175 on Nov. 1, the most since Oct. 17. Sterling was little changed at 80.06 pence per euro after appreciating to 79.86 pence, the strongest since Oct. 2. A gauge based on a survey of purchasing managers fell to a 22-month low of 50.6 from 52.2 in September, Markit Economics and the Chartered Institute of Purchasing and Supply said in London today. That’s below the lowest estimate of 51 in a survey of 30 economists by Bloomberg News. The median forecast was 52. The Bank of England will maintain its level of asset purchases at 375 billion pounds this month, according to the median estimate of 45 economists in a Bloomberg survey. Outlook Concern In a speech last week, central bank Deputy Governor Charlie Bean said consumer and business concerns about the economic outlook may undermine the impact of QE. In September, his fellow deputy governor Paul Tucker said the asset-purchase program no longer has “the same bite.� The pound has gained 1.5 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro dropped 3 percent and the dollar fell 1.6 percent. The U.K. 10-year yield fell three basis points, or 0.03 percentage point, to 1.83 percent. The 1.75 percent bond maturing in September 2022 advanced 0.28, or 2.80 pounds per 1,000-pound face amount, to 99.33. Gilts have returned 2.5 percent this year through Nov. 2, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bonds gained 3.5 percent and U.S. Treasuries earned 1.9 percent. To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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