The pound fell against the euro and the dollar for a second day on speculation economic reports this week will add to evidence the Bank of England needs to cut interest rates further to revive growth. The British currency also slipped versus the yen before economic surveys that may show house prices and consumer confidence fell, while factories raised prices at the slowest pace in at least a year. The pound declined after a report show the construction industry contracted in January. The Bank of England will cut its benchmark rate by 50 basis points to an all-time low of 1 percent on Feb. 5, according to a Bloomberg News survey of 61 economists. “Given the combination of U.K.-specific and global risks, we see further scope for the U.K. to disappoint or even a currency crisis,” said Michael Klawitter, a currency strategist in Frankfurt at Dresdner Kleinwort. “In the near term, the pound may find some support because a lot of short positions have already been built. We still expect the currency to fall toward parity with the euro over the next few months.” The pound weakened to 90.33 pence per euro as of 11:40 a.m. in London, from 90.03 pence yesterday. It declined to $1.4215, from $1.4264. Against the yen, the currency dropped to 127.39 yen, from 127.59. Trade-Weighted Index The pound’s trade-weighted index, a gauge of performance versus the U.K.’s principal trading partners, slipped to 73.56, from 73.88. Vodafone Group Plc, the world’s largest mobile-phone company, said today sales rose 14 percent in the third quarter, partly helped by the pound’s decline. A construction index, based on a survey of purchasing managers at building companies, was at 34.5, compared with 29.3 in December, which was the lowest since the survey began in April 1997, the London-based Chartered Institute of Purchasing and Supply and Markit said today. A reading below 50 indicates contraction. Construction accounts for 6 percent of the economy. Two-year gilts fell after an auction of 3.75 billion pounds ($5.3 billion) of 3.25 percent securities due 2011, part of a record 146.4 billion pounds of bonds the government plans to sell in the fiscal year ending March 31. The sale drew bids for 2.01 times the amount of securities on offer, compared with 1.57 times in the previous auction in December and an average of 2.1 percent. The average yield was 2.135 percent, compared with 2.594 percent at the last auction. “The market made room for more supply, and that perhaps explained the concession or the rise in yields today,” said Sean Maloney, a fixed-income strategist in London at Nomura International Plc. “There’s room for yields to come down after the market absorbed this bond. The economic outlook remained bleak.” The yield on the two-year note climbed four basis points to 1.56 percent. The price of the 4.25 percent security due March 2011 fell 0.09, or 90 pence per 1,000-pound face amount, to 105.50. The 10-year yield was at 3.69 percent. A basis point is 0.01 percentage point.

Source