Pound Falls Versus Euro as Bank of England Minutes Show Split

By Paul Dobson

Nov. 18 (Bloomberg) -- The pound fell against the euro after minutes from this month’s Bank of England meeting showed policy makers split three ways on whether to extend their debt- buying plan and discussed cutting the deposit rate on reserves.

Sterling snapped a four-day gain versus the 16-nation currency and was little changed versus the dollar. A majority of policy makers voted on Nov. 5 to boost the asset-purchase plan by a less-than-forecast 25 billion pounds ($42 billion), minutes published today showed. One member of the Monetary Policy Committee favored no change and one voted for an expansion.

“It’s very inconclusive,” said Peter Frank, a currency strategist in London at Societe Generale SA. “The two camps don’t seem to be agreeing. We’re coming to the end of the quantitative-easing process and people are worrying over how the inflation risk plays out ahead.”

The pound fell 0.4 percent to 88.87 pence per euro as of 10:30 a.m. in London, and traded at $1.6810, from $1.6812 yesterday.

U.K. government bonds were little changed, with the yield on the 10-year gilt rising 2 basis points to 3.69 percent. The two-year note yield slipped 1 basis point to 1.27 percent.

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