London: The pound fell to its lowest level against the euro this month after data signalled Britain's economic recovery may be slowing.

Sterling was weaker against all but two of its 16 most-traded peers after a UK housing-market gauge showed the first decline in prices in a year in July, while a separate survey said stores posted slower sales growth last month. The Bank of England (BOE) is due to publish its quarterly Inflation Report today.

Government bonds were little changed after a sale of £1.75 billion (Dh10.24 billion) of gilts due in 2034.

"We are seeing some moderation in UK data and it would be an easy way for the BOE to justify maintaining policy where it is for the foreseeable future," said Henrik Gullberg, a currency strategist at Deutsche Bank AG in London.

"Euro-sterling is somewhat vulnerable for a move to the upside."

The UK currency depreciated 0.4 per cent to 83.50 pence per euro in London after reaching 83.63 pence, its weakest level since July 30.

The pound fell 1.1 per cent to $1.5717 after reaching $1.5715, the lowest level since August 2.

A British Retail Consortium survey showed retail sales values rose an annual 0.5 per cent in July, compared with a 1.2 per cent increase in June.

Real estate outlook

The number of real-estate agents and surveyors saying UK prices fell exceeded those reporting gains by 8 percentage points last month, compared with a positive reading of 8 in June, the Royal Institution of Chartered Surveyors said.

"Recent UK data hasn't been impressive and we expect the BOE to revise down its growth projections," said John Hydeskov, senior currency analyst at Danske Bank in Copenhagen.

The Bank of England may lower its forecast for 2011 economic growth in its quarterly inflation report today, according to 14 of 16 economists surveyed by Bloomberg.

Two of the economists said policymakers will cut their 2010 forecast, with 10 predicting no change and four expecting an increase. The bank will also publish new inflation forecasts.

"All of a sudden the pound is looking very soft," said Lee McDarby, a trader at Investec's treasury-solution unit in London, in a note to clients yesterday. "With inflation figures still to come, this week promises to be a true test of sterling's resolve."

The yield on 30-year UK government bonds rose two basis point to 4.20 per cent and the 10-year gilt was little changed at 3.25 per cent.