By Matthew Brown and Morwenna Coniam Oct. 21 (Bloomberg) -- The pound rose and U.K. government bonds slid as minutes of the Bank of England’s meeting this month showed policy makers voted unanimously to keep their asset-purchase program unchanged. Sterling advanced to the highest level against the dollar in more than a month and two-year gilt yields increased by the most since Sept. 29. BOE Governor Mervyn King, writing in an opinion piece published today by the Herald newspaper of Scotland, said rates will rise “at some point” and “it would be wise to take this into account.” The Treasury began selling 50-year bonds, according to a banker involved in the deal. “It’s shifted the balance in favor of the Bank of England remaining on hold in November,” said Lee Hardman, a foreign- exchange strategist in London at Bank of Tokyo-Mitsubishi UFJ Ltd. “The pound will go up.” The U.K. currency jumped 1.2 percent to $1.6573 as of 10:36 a.m. in London. Against the euro, the pound strengthened 1.2 percent to 90.17 pence. The yield on the 10-year gilt increased 10 basis points to 3.64 percent. The 4.5 percent security due March 2019 fell 0.85, or 8.5 pounds per 1,000-pound face amount, to 106.76. The two- year gilt yield also rose 10 basis points, to 0.92 percent. “Gilts have been hit hard,” said David Keeble, head of fixed-income strategy in London at Calyon, the investment- banking unit of Credit Agricole SA. “The minutes are more growth positive than I expected. It doesn’t support the case for an extension of quantitative easing.” Rate Speculation Mounting evidence that Britain may be emerging from the recession, including rising house prices, are raising the prospect of higher interest rates and a pause in the central bank’s debt-buying program, which was started in March in an effort to lower borrowing costs. Policy makers will announce their next decision on so-called quantitative easing and rates on Nov. 5. The U.K.’s short-sterling futures contract expiring in March 2010 climbed 4 basis points to 0.89 percent today as traders raised bets borrowing costs will rise. The Bank of England should pause quantitative easing after the economy probably emerged from the recession, the National Institute for Economic and Social Research said today. Gross domestic product may expand 0.7 percent in the fourth quarter after it stagnated in the previous three months, according to the London-based institute. Policy makers kept their benchmark rate at a record low of 0.5 percent at its Oct. 8 meeting to support a recovery from the worst economic slump in 30 years. The bank also maintained a program to buy 175 billion pounds of bonds with newly created money. Australia this month became the first Group-of-20 nation to raise rates since the start of the global financial crisis. Britain probably emerged from the recession in the third quarter after five quarters of contraction, a Bloomberg News survey shows.

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