Oct. 15 (Bloomberg) -- The yen tumbled the most versus the pound since February as speculation the Bank of England may pause its asset-purchase program forced traders to close bets that Japan’s currency would rally versus sterling. The pound rose the most in more than eight months against the euro after the Financial Times reported that Bank of England Markets Director Paul Fisher said policy makers would be more likely to suspend asset purchases. The dollar erased its gain versus the euro as Federal Reserve reports on regional manufacturing showed a combination of strength and weakness. “The Fisher comments were a surprise,” said Jessica Hoversen, a fixed-income and foreign-exchange analyst in Chicago at MF Global Ltd., a brokerage firm. “Given the rhetoric leading up to this point, the market has anticipated the Bank of England would continue” the asset-purchase program. The comments resulted in a “short squeeze,” in which investors were forced out of bets that sterling would drop, she said. The yen dropped as much as 3.1 percent to 142.85 per pound before trading at 146.92 at 11:04 a.m. in New York, from 142.94 yesterday. It was the biggest intraday decline since Feb. 23. The yen depreciated 1 percent to 90.30 per dollar and fell 1.1 percent to 134.92 per euro. Sterling strengthened as much as 2.2 percent to 91.43 pence per euro in the biggest intraday gain since Jan. 30. It advanced 1.7 percent to $1.6253, extending its gain in the past three days to 2.9 percent. The Bank of England’s Fisher said policy makers would be more likely to pause asset purchases, giving themselves the option of “doing more later,” rather than stopping them, according to the Financial Times. Rising asset prices and improved confidence may be signs the program is working, Deputy Governor Charles Bean said this week. The Australian dollar rose to a 14-month high as Reserve Bank Governor Glenn Stevens said policy makers can’t be “too timid” in raising interest rates. To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Matt Townsend in New York at mtownsend9@bloomberg.net

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