The pound fell against the dollar and the yen as signs of a fading global recovery curbed demand for assets that are correlated to economic growth. Sterling pared a weekly gain versus the U.S. currency and traded at the weakest level in more than six weeks against the euro before the release of reports that economists said will show U.S. household sentiment deteriorated and consumer prices fell. British house prices are set to drop through 2012 as government spending cuts and tighter credit deter buyers, Capital Economics Ltd. said. “We’re leaning toward a risk-off environment and the pound tends to suffer when the world moves to risk off,” said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank Ltd. in London. House price data “is pointing toward stagnation, and that can be pound negative,” he said. The pound fell 0.5 percent to $1.5379 as of 11:24 a.m. in London after reaching $1.5472 yesterday, the highest level since April 27. Sterling slid 0.8 percent to 134.04 yen and depreciated as much as 0.9 percent to 84.48 pence per euro, the least since June 1. The U.S. consumer-price index fell 0.1 percent in June, a third monthly decline, according to the median forecast of 75 economists in a Bloomberg survey before the Labor Department data today. Consumer sentiment fell to 74 this month from 76 in June in the Thomson Reuters/University of Michigan preliminary index, according to a separate survey of economists. Weekly Advance The pound is still up 2.1 percent for the week against the dollar after reports showed a greater-than-estimated drop in U.K. jobless benefits and stronger-than-forecast inflation. Sterling has gained 8.1 percent since reaching a low for the year of $1.4231 on May 20, as confidence rose that the government formed after the May 6 election will reduce Britain’s deficit without sending the nation back into recession. The pound has posted declines against the euro for both periods amid growing optimism that the Greek debt crisis may be contained. Ten-year U.K. government bonds were little changed, headed for a weekly decline that has pushed the yield to 3.37 percent from 3.34 percent on July 9. The extra yield investors demand to hold U.K. 30-year bonds instead of equivalent-maturity German securities may narrow as Britain refrains from selling similar-maturity debt this quarter, BNP Paribas SA said. “We find tactical long gilt 30-year positions versus Germany tempting, particularly ahead of the launch of the new bund 2042” on July 21, Matteo Regesta, a fixed-income strategist in London, said by e-mail today. “The June inflation data still pointed to a continuation of the downward path” in the U.K. that started in May, he said. “The issuance calendar does not include further long-end issuance until at least October,” apart from one sale of a 2030 gilt, Regesta wrote.

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