London: The pound had its biggest weekly slide against the euro in five months and gilts rose as Bank of England policymakers signalled further measures may be needed to boost the UK's ailing economy.
Sterling fell to a nine-month low against the dollar on Friday as governor Mervyn King said the central bank will do "whatever seems appropriate" to sustain Britain's recovery.
Data showed business investment unexpectedly fell 5.8 per cent in the fourth quarter, while state spending rose more than economists forecast. Concern Britain may struggle with its deficit was compounded by speculation this year's election will produce a government too weak to curb spending.
"It's a pretty negative cocktail," said Adam Cole, head of currency strategy at RBC Capital Markets in London. "There's that lingering risk of more quantitative easing, the data flow hasn't been helpful and all the polls are pointing to a hung parliament."
The pound depreciated 1.8 per cent against the euro to 89.55 pence, the biggest drop since September 25. Sterling fell 1.9 per cent against the dollar to $1.5176 after reaching $1.5164, the lowest level since May 18. The yield on the benchmark 10-year gilt fell 14 basis points to 4.04 per cent and the two-year note yield declined 20 basis points to 0.94 per cent.
All 60 economists in a Bloomberg survey estimate the Bank of England will keep its main interest rate unchanged at a March 4 meeting.
