By Lucy Meakin April 19 (Bloomberg) -- The pound depreciated against the euro, snapping four days of gains, amid speculation the Bank of England will raise interest rates at a slower pace than its European counterpart. Britain’s currency pared gains versus the dollar before the central bank releases minutes of policy makers’ April 7 meeting tomorrow. Short-sterling futures due in December have declined just twice since April 6, with the yield dropping 31 basis points during that time as investors trimmed bets on higher borrowing costs. Data last week showed U.K. consumer price inflation unexpectedly declined in March. “Even before the CPI data, the market was pricing out an early rate hike,” said Jane Foley, a senior currency strategist at Rabobank International in London. “Unless the euro falls through the floor on the back of the peripheral issues, sterling will continue to be vulnerable against the euro in the next one- to-three months. It’s quite possible that the euro will continue to find decent support from interest-rate differentials.” Sterling weakened 0.3 percent to 87.76 pence per euro as of 2:52 p.m. in London. Against the dollar, the pound was little changed at $1.6285. The 10-year gilt yield was little changed at 3.56 percent. The 30-year yield rose two basis points to 4.27 percent. The 30-year breakeven rate, a gauge of U.K. inflation expectations derived from the yield difference between index- linked and non-index-linked bonds, gained for the first day in eight, reaching 3.52 percentage points. It earlier slipped to 3.51 percent, the lowest since December 7. U.K. consumer price data for April will be published on May 17. “The rate situation in the U.K. is going to hinge on the next consumer-price index print,” said Elizabeth Gregory, a Geneva-based market strategist at Swissquote Bank SA. “It would be very damaging to the pound’s prospects if next month’s CPI is going to be another downside surprise.” The Debt Management Office today auctioned 900 million pounds of inflation-linked bonds maturing in 2050, with investors demanding 1.97 times the amount of securities on offer. --Editors: Keith Campbell, Peter Branton. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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