Pound Drops for Third Day Versus Dollar on Bank Lending Concern

By Paul Dobson

Nov. 19 (Bloomberg) -- The pound fell for a third day against the dollar on speculation the country’s banks will disclose more credit losses.

The U.K. currency had its biggest decline in more than a week against the yen as demand increased for the relative safety of the Japanese and U.S. currencies. The Daily Telegraph said in a report today that U.K. lenders were in a worse state than those elsewhere, citing Experian Plc, the world’s largest credit-checking company. The FTSE 350 Banks index fell 0.2 percent.

“There are ongoing concerns about the state of the banking sector in the U.K. that is weighing on sterling,” Jeremy Stretch, a senior currency strategist at Rabobank International in London, said in a Bloomberg Television interview.

The pound fell 0.6 percent to $1.6654 as of 8:14 a.m. in London, and weakened 1 percent to 148.11 yen, the biggest intraday drop against the Japanese currency since Nov. 11. Sterling rose 0.1 percent to 89.22 pence per euro.

“The most troubling part is that I’m not convinced defaults have yet peaked,” the Telegraph cited Experian Plc’s Chief Executive Officer Don Robert as saying.

U.K. government bonds were little changed with the yield on the 10-year gilt at 3.68 percent and the yield on the two-year security 1 basis point lower at 1.24 percent.

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