By Gavin Finch
Sept. 14 (Bloomberg) -- The pound fell against the dollar and the euro after Ernst & Young LLC’s Item Club said the U.K. housing-market slump will resume next year as the squeeze on mortgage lending persists.
The pound dropped from near the highest level in more than five weeks against the U.S. currency as the FTSE 100 Index declined 0.6 percent, falling below 5,000. Martin Sorrell, chief executive officer of WPP Plc, the world’s largest advertising company, said he doesn’t see any signs of an economic recovery, the Wall Street Journal reported, citing an interview.
“The medium-term outlook is still bearish in our view,” analysts led by Hans-Guenter Redeker, London-based global head of currency strategy at BNP Paribas SA, wrote in a research note today. “The U.K. data mix continues to provide negative signals.”
The pound dropped 0.5 percent to $1.6579 as of 8:49 a.m. in London. Sterling weakened 0.4 percent to 87.86 pence per euro.
The yield on the two-year government note was little changed at 0.88 percent, with the 10-year gilt yield up 1 basis point at 3.62 percent.
The U.K. will sell as much as 1 billion pounds of 6 percent bonds due in 2028 today.
Gilts lost investors 0.2 percent this month, compared with a 0.2 percent return for German bonds, according to Merrill Lynch & Co. indexes.
To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net
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