The pound fell to its lowest level against the euro in more than six months on speculation the Bank of England will expand its asset-purchase program. The British currency also slid against the dollar and the yen. The U.K. inflation rate dropped in September by more than economists forecast, to the lowest level in five years, fanning speculation the central bank may need to increase asset purchases to buoy the economy. New Zealand’s dollar climbed after the nation’s retail sales rose in August by the most since 2007 and more than twice the amount forecast by analysts. “The pessimism about the pound is approaching very elevated levels,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. The pound dropped 0.5 percent to 93.94 pence per euro as of 10:16 a.m. in London, after trading at 94.10 pence, the weakest level since March 27. It fell 0.5 percent to $1.5729 and 0.5 percent to 141.26 yen. The New Zealand dollar rose 0.2 percent to 73.47 U.S. cents. The British Chambers of Commerce said the U.K. central bank should extend the 175 billion-pound ($276 billion) program by 25 billion pounds. Prime Minister Gordon Brown said yesterday ending stimulus programs too soon could derail the recovery. UBS AG cut its forecasts for the pound today, citing the likelihood that policy makers will expand asset purchases.

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