U.K. government bonds fell, snapping a three-day gain, before the Bank of England publishes its latest quarterly projections on growth and inflation. Sterling rose against the dollar for the first time in six days after the unemployment rate dropped in the three months through September. Data yesterday showed consumer prices rose 2.7 percent from a year earlier, the fastest pace since May. The Bank of England’s inflation report is due at 10:30 a.m. in London. The central bank refrained from adding more stimulus through bond purchases at its most recent policy meeting. “Gilts are under a bit of pressure on speculation that the quarterly inflation report today will justify why the Bank of England paused its quantitative easing program,� said John Wraith, a fixed-income strategist at Bank of America Merrill Lynch in London. “There is a concern that the report may turn out to be more hawkish than the market has priced in and signals that enough QE has been done.� The benchmark 10-year gilt yield rose four basis points, or 0.04 percentage point, to 1.75 percent at 9:50 a.m. London time. The 1.75 percent bond maturing in September 2022 dropped 0.39, or 3.90 pounds per 1,000-pound ($1,589) face amount, to 99.97. Jobless Claims Sterling rose 0.1 percent to $1.5894. The pound weakened 0.2 percent to 80.19 pence per euro. It fetched 127.05 yen, a 0.8 percent advance. Sterling has gained 1.2 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro fell 3.1 percent and the dollar dropped 1.3 percent. The unemployment rate slid to 7.8 percent from 7.9 percent in the three months through August, data today showed. Jobless-benefit claims rose 10,100 to 1.58 million in October, the biggest increase since September last year, the Office for National Statistics said today in London. The median of 28 estimates in a Bloomberg News survey was for no change. Employment based on International Labor Organization methods rose 100,000 in the three months through September, half the pace of the previous three months as a boost from the London Olympics began to unwind. Gilts returned 3.5 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 4.1 percent and U.S. Treasuries rose 2.8 percent. To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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