The pound fell to a three-week low against the dollar after a report showed Britons’ confidence in the outlook for employment weakened, strengthening the argument for the central bank to resume asset purchases. Sterling extended two weeks of losses against the yen and slumped below its 200-day moving average against the dollar for the first time since July. Government bonds rose, pushing yields on two-year gilts to a record low, as growth in service industries slowed. Goldman Sachs Group Inc. said it expects the Bank of England to restart so-called quantitative easing “in the coming months” and pushed back its forecast for higher interest rates until 2013. “Over the past couple of weeks the topic of QE has got more momentum behind it,” said Jane Foley, a senior currency strategist at Rabobank International in London. “The fact that it appears to be on the table is likely to keep sterling undermined.” The pound fell as much as 0.7 percent to $1.6098, the lowest level since July 20, before trading 0.4 percent lower $1.6145 at 10:35 a.m. in London. Sterling slipped below its 200- day moving average, currently at $1.6124, for the first time since July 19, according to data compiled by Bloomberg. The pound fell 0.6 percent to 1.2714 Swiss francs and was little changed at 87.58 pence per euro. The U.K. currency declined 0.4 percent to 124.051 yen, after depreciating 0.8 percent last week. Gilts Gain The two-year gilt yield fell three basis points to 0.53 percent, after dropping as low as 0.494, the least since Bloomberg started collecting data on the securities in 1992. The 10-year yield declined 11 basis points to 2.33 percent. An index of consumer sentiment toward hiring prospects slid 13 points to minus 66 for August, Lloyds Bank Corporate Markets said today. That’s the lowest since February. A gauge of services activity based on a survey of purchasing managers fell to 51.1 from 55.4 in July, according to Markit Economics and the Chartered Institute of Purchasing and Supply. November is the most likely month for the resumption of bond purchases by the central bank, and there is likely to be 100 billion pounds of quantitative easing over two quarters, Goldman economists Kevin Daly and Adrian Paul in London wrote in a note to clients dated Sept. 2. Sterling has weakened 6.7 percent in the past 12 months against a basket of nine major peers, according to Bloomberg Correlation-Weighted Currency Indexes. Only the dollar has weakened more, depreciating 11 percent. To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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