The pound weakened to a nine-month low against the euro as investors favored assets in the 17- member currency region, betting the struggling U.K. economy will weigh on sterling. Gilts fell for the first time in five days as the Debt Management Office sold 1 billion pounds ($1.6 billion) of inflation-linked securities maturing in 2029. The yield on U.K. 10-year index-linked gilts climbed from a record low. Bank of England policy makers held their target for bond purchases at 375 billion pounds last week. The central bank will publish new forecasts for growth and inflation next month that will inform their February decision. “It’s a story of euro strength,� said Steven Barrow, head of Group-of-10 research at Standard Bank Plc in London. “Against the pound what tends to drive that is not just an improvement in sentiment towards the euro and the euro-zone crisis, but also a sense that if this pressure continues to lift, money market conditions may tighten in the euro zone.� Sterling depreciated 0.5 percent to 83.41 pence per euro at 11:44 a.m. London time, after reaching 83.46 pence, the weakest since April 3. The pound rose 0.2 percent to $1.6032, after dropping to $1.5976 yesterday, the least since Nov. 28. The 10-year gilt yield climbed four basis points, or 0.04 percentage point, to 2.04 percent after falling to 1.98 percent yesterday, the lowest level since Jan. 3. The 1.75 percent securities maturing in September 2022 dropped 0.35, or 3.50 pounds per 1,000-pound face amount, to 97.485. The rate on 10-year index-linked gilts added two basis points to minus 1.05 percent, after earlier dropping to a record minus 1.08 percent. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net.

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