Pound Trades Near Lowest in Week on Asset-Purchase Speculation

By Paul Dobson

Oct. 26 (Bloomberg) -- The British pound traded near its lowest level in a week versus the dollar on speculation the Bank of England will expand measures to revive the shrinking economy.

The U.K. currency was also near its weakest level since Oct. 15 against the euro even after a report showed business confidence rose to an 18-month high in the third quarter. The Office for National Statistics said on Oct. 23 that gross domestic product slid 0.4 percent in the period.

“Sterling has clearly been shocked by the U.K. GDP drop,” Roberto Mialich, a senior global-currency strategist in Milan at UniCredit SpA, said today in an investor note. “We now expect the BOE will revise up the quantitative easing scale to 225 billion pounds ($367 billion) in the November meeting.”

The pound traded at $1.6303 by 8:06 a.m. in London, versus $1.6306 last week. It weakened to 92.20 pence per euro, from 92.02 pence.

The weaker pound is boosting bets on a recovery by bolstering demand for British exports, according to a third- quarter survey of senior executives by Opinion Leader Research for KPMG. Nineteen percent of executives surveyed said the outlook for business is “good” or “very good,” up from 9 percent in the previous quarter, the report published today showed.

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net