The pound fell for a second day against the dollar after a report showed U.K. retail sales slumped in April, fueling speculation the central bank will consider more stimulus measures at its policy meeting this week. Sterling dropped to a two-week low versus the greenback as eight of the 43 economists surveyed by Bloomberg predict the Monetary Policy Committee will increase the size of its asset- purchase program at its two-day gathering starting today. Ten- year gilt yields fell to a record as a stalemate in Greece following elections on the weekend boosted demand at an auction of U.K. 30-year bonds. “This morning’s retail sales data was soft,� said Chris Walker, a currency strategist at UBS AG in London. “It’s still unlikely� the Bank of England will increase asset purchases this month “but it’s more likely than it was two or three weeks ago as we’ve seen a moderation in economic data.� The pound dropped 0.3 percent to $1.6113 at 11:45 a.m. London time after falling to $1.6099, the weakest since April 25. Sterling was little changed at 80.50 pence per euro. It earlier appreciated to 80.36 pence, the strongest level since November 2008. Sales at stores open at least 12 months, measured by value, declined 3.3 percent in April from a year earlier, the biggest monthly drop since March 2011, the London-based British Retail Consortium said in an e-mailed report. Double Dip With Britain suffering its first double-dip recession since 1975, the central bank will decide tomorrow whether to add more stimulus to its existing 325 billion pounds of bond purchases. Officials have to balance the need to bolster the economy with the threat of inflation, which has been above their 2 percent target for more than two years. All 61 economists in a Bloomberg News survey predict the Bank of England will keep its benchmark interest rate at a record-low 0.5 percent. Sterling has appreciated 4.5 percent in the past three months, the best performer of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 2.4 percent, and the euro fell 0.3 percent. Ten-year gilts advanced for a second day as Greek politicians struggled to form a new government, increasing concerns the nation will withdraw from the common-currency bloc. Gilts also rallied as the Debt Management Office sold 2 billion pounds of 30-year bonds at an average yield of 3.224 percent, down from 3.431 percent at a prior auction on March 15. Investors bid for 2.22 times the amount of debt allotted, up from a so-called bid-to-cover of 1.71 in March. Record Low The 10-year gilt yield fell four basis points, or 0.04 percentage point to 1.89 percent after falling to 1.893 percent, the lowest since Bloomberg began compiling the data in 1989. The 4 percent bond due in March 2022 rose 0.42, or 4.20 pounds per 1,000-pound face amount, to 118.80. The two-year gilt yield has fallen below its 100-day moving average at 0.413 percent and may meet resistance at the April 10 low at 0.357 percent, according to data compiled by Bloomberg. Resistance refers to an area on a price chart where analysts expect orders to sell a security to be grouped. The two-year yield dropped two basis points to 0.38 percent. The 100-day moving average is at 0.41 percent. Gilts have handed investors a loss of 0.1 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. U.S. Treasuries rose 0.6 percent and German bunds gained 2.1 percent. To contact the reporter on this story: Keith Jenkins in London at kjenkins3@bloomberg.net To contact the editors responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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