The pound declined against the dollar and the euro amid speculation the Bank of England will announce plans to boost liquidity among the U.K.’s lenders. Sterling dropped against all of its 16 major peers as the Financial Times reported that Chancellor of Exchequer George Osborne and the central bank may announce as early as today measures to improve the flow of credit into the economy. Gilt fell for a fourth day before the Debt Management Office sells 1.5 billion pounds ($2.3 billion) of 2060 bonds. Benchmark interest rates have been kept at a record low of 0.5 percent since policy makers cut it by 50 basis points in March 2009. “The market is expecting some kind of liquidity measures from policy makers after the cut in official base rates did little to bring down borrowing costs in the real economy,� said Ian Stannard, the head of European currency strategy at Morgan Stanley in London. “Although such measures should benefit the economy, people in the market speculate they might involve more policy easing, which could be bad for the pound.� The pound dropped to $1.5492 at 9:20 a.m. London time, from $1.5505 yesterday. It reached $1.5269 on June 1, the lowest in almost five months. Sterling weakened 0.2 percent to 81.15 pence per euro. One pound fetched 122.96 yen, compared with 123.24 yen yesterday. The yield on 10-year gilts climbed two basis points, or 0.02 percentage point, to 1.77 percent, having risen 14 basis points since June 8. The 4 percent bond due December 2022 dropped 0.20, or 2 pounds per 1,000-pound face amount, to 119.85. Gilts have returned 1.4 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Bunds advanced 2.5 percent and Treasuries gained 1.9 percent. To contact the reporter 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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