By Paul Dobson and Ron Harui March 2 (Bloomberg) -- The pound fell for a sixth day versus the dollar, its longest run of declines in more than 16 months, amid concern Britons may fail to elect a government with a large enough majority to cut the country’s deficit. Sterling slid against 10 of its 16 most-traded peers after a poll late yesterday showed the Conservative’s lead over the Labour Party narrowed, adding to signs Britain may have its first minority government since 1974. The euro fell versus the dollar as Greek civil servants called a new 24-hour strike on March 16. The dollar rose after Philadelphia Federal Reserve Bank President Charles Plosser told the Wall Street Journal the Fed should back away from its pledge to keep interest rates low for an “extended period.” “A couple of new U.K. opinion polls are re-emphasizing the political dynamic, which is a sterling negative,” said Jeremy Stretch, a currency strategist at Rabobank International in London. “Investors will prefer the safer haven of the dollar in this type of environment.” The pound fell to $1.4953 as of 10:17 a.m. in London, from $1.4991 in New York yesterday, when it dropped to $1.4784, the lowest level since May 1. Its sixth day of losses is the longest streak since October 2008. The euro weakened to $1.3492, from $1.3560, and depreciated to 120.10 yen, from 120.86. The yen strengthened to 89.03 per dollar, from 89.13 yen. Sterling Slump Sterling yesterday had its biggest drop against the dollar since Oct. 23, based on closing prices, as a poll showed the opposition Conservative Party holding the smallest lead over the Labour Party in more than two years. The Tories’ lead was five percentage points in the ComRes Ltd. poll published yesterday. Elections must be held by June. Prime Minister Gordon Brown is selling a record amount of debt to finance stimulus measures introduced to help the economy recover from its longest recession on record. In December, the government increased gilt sales planned for the fiscal year ending this month to 225.1 billion pounds ($336 billion), up from 220 billion pounds announced in April. “A hung parliament in the U.K. is clearly bearish because the market would not expect them to press ahead with fiscal measures,” said Thomas Harr, a senior currency strategist at Standard Chartered Plc in Singapore, in an interview. “If this continues and we end up in a hung parliament, sterling could fall more.” Euro Drops The euro traded at its lowest level against the dollar since May 18 after European Union Monetary Affairs Commissioner Olli Rehn yesterday said Greece must reveal new measures “in the coming days” to allay officials’ concerns that the current austerity plan falls short. Greek Prime Minister George Papandreou is scheduled to meet German Chancellor Angela Merkel on March 5. Greece’s federation of civil servants unions, ADEDY, will hold a new 24-hour strike on March 16, a union official said today in a statement to state-run NET TV. “Sentiment on Europe and the U.K. remains very negative and the market is likely to still favor selling euros and sterling into strength,” analysts led by Marc Chandler, New York-based global head of currency strategy at Brown Brothers Harriman & Co., wrote in a research note dated today. The U.S. dollar rose against 10 of the 16 most-traded currencies on speculation U.S. policy makers may start to remove emergency measures introduced to revive the economy. “I don’t like that language,” Plosser said in an interview with the Wall Street Journal, referring to the “extended period” wording. “What is troubling about the words is that it ties our hands, or people believe that it ties our hands.” Plosser made similar remarks at a speech in Philadelphia last month. Fed presidents rotate in voting on monetary policy, with Plosser voting next year. “Hawkish comments triggered some buy-back of the dollar,” said Masahiro Ito, senior manager of foreign-exchange sales and marketing at Central Tanshi FX Co., a unit of Japan’s largest money broker. “If forthcoming data support his bullish view, the dollar may regain some momentum.” To contact the reporters on this story: Paul Dobson in London at pdobson2@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net

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