By Paul Dobson and Beth Mellor Nov. 19 (Bloomberg) -- The pound fell for a third day against the dollar on speculation Britain’s banks will disclose more credit losses. Sterling also fell versus the yen as demand increased for the relative safety of the Japanese and U.S. currencies. U.K. lenders are in a worse state than those elsewhere, the Daily Telegraph reported today, citing credit-checking company Experian Plc. Chief Executive Officer Don Robert said he is “not convinced defaults have yet peaked.” The FTSE 350 Banks index fell 0.4 percent. “There are ongoing concerns about the state of the banking sector in the U.K. and that is weighing on sterling,” Jeremy Stretch, a senior currency strategist at Rabobank International in London, said in a Bloomberg Television interview. The pound fell 0.7 percent to $1.6633 as of 2:30 p.m. in London. It weakened 1.3 percent to 147.68 yen after earlier sliding to 147.54 yen, the biggest drop since Nov. 2. Sterling fell 0.2 percent to 89.47 pence per euro. Losses at banks have exacerbated the U.K.’s widening deficit, with the bailout of Royal Bank of Scotland Group Plc the most expensive globally. The U.K. currency dropped 0.3 percent against the dollar on Nov. 2 after Britain said it would invest an extra 31.3 billion pounds in a second bailout of RBS and Lloyds Banking Group Plc. Budget Deficit Britain’s budget deficit in October was the worst for the month since records began in 1993 as the recession destroyed tax revenue and welfare costs surged. The 11.4 billion-pound shortfall compared with a deficit of 130 million pounds a year earlier, the Office for National Statistics said today. The median of 17 forecasts in a Bloomberg News survey was for a 7 billion-pound deficit. The pound fell yesterday against the euro and the dollar yesterday after minutes from this month’s central bank meeting showed policy makers split three ways on whether to extend asset purchases and discussed cutting the deposit rate on reserves. The Bank of England Monetary Policy Committee has been divided between those who favor more aggressive action to overcome the longest recession on record and others who have said the stimulus measures may already be succeeding. Chief Economist Spencer Dale favored no change at the Nov. 5 meeting, according to the minutes. David Miles sought a 40 billion-pound expansion. Revised GDP The statistics office published revised data showing retail sales rose in September. Sales increased 0.4 percent in October compared with the previous month. They climbed by the same amount in September, revised up from no change, the office said. “The revisions in the previous month maybe imply some upward revision to gross domestic product data,” said Stuart Bennett, a London-based analyst at Calyon, the investment- banking arm of Credit Agricole SA. The U.K. statistics office said last month that GDP slid 0.4 percent in the third quarter. U.K. government bonds were little changed, with the yield on the 10-year gilt at 3.68 percent. The yield on the two-year note was at 1.25 percent. To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

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