The pound's trade-weighted index slipped for a fourth day, the longest losing run since May, after Nationwide Building Society's index of sentiment dropped 6 points to the weakest since the survey began in May 2004. The currency rebounded against the dollar after Iran's state television said a missile, capable of reaching Israel, was fired during war games today.
The pound fell to 79.63 pence per euro by 1:03 p.m. in London, from 79.57 pence yesterday. It was at $1.9719, from $1.9696, after falling to as low as $1.9673 earlier.
The pound's trade-weighted index, a broader gauge of the currency's performance against Britain's major trading partners, slipped to 88.94, the lowest level since June 12.
U.K. government bonds fell, snapping a six-day advance, as gains in stocks sapped demand for the safest assets. Gilts also followed European bonds lower after European Central Bank President Jean-Claude Trichet said today inflation risks have ``intensified'' recently.
The MSCI World Index added 0.5 percent, with financial stocks climbing the most in two months. Financial equities have led a rout that erased more $11 trillion from global equities in 2008. The U.K.'s FTSE 100 Index rose 1.6 percent.
The U.K. is skirting a recession as house prices fall, banks roll back credit and oil costs increase. Bank of England Governor Mervyn King said June 26 the inflation rate may jump to 4 percent, double the target, and that the economy may contract.