By Simon Kennedy, MarketWatch LONDON (MarketWatch) -- The dollar jumped higher against the British pound Friday after data showed the U.K. recession had unexpectedly extended into its sixth straight quarter. The pound fell 1.3%, or more than 2 cents, against the greenback to $1.6407 after the announcement that U.K. GDP dropped 0.4% in the third quarter, compared to expectations of a 0.1% rise. See story on U.K. GDP. The dollar was also slightly higher against the yen, rising 0.3% to 91.73 yen. The pound's weakness reflected expectations that the Bank of England may have to continue with its asset purchasing program and that interest rates will remain low for a longer period. There had been speculation ahead of the GDP data that the central bank could soon start to withdraw some of its monetary stimulus. "With the Bank of England set to publish its inflation report and re-assess quantitative easing in November, an extension of the asset purchase facility is on the cards," said Charles Davis, senior economist at the Centre for Economics and Business Research. Davis added he expects asset purchases to reach 250 billion pounds, from the current level of 175 billion pounds, and for U.K. interest rates to remain at 0.5% through 2010 and into 2011. The pound was also sharply lower against other major currencies, with the euro gaining 1.4% at 0.9171 pounds. In Japan the yen fell to a one-month low against the dollar and a two-month low against the euro.

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