Feb. 13 (Bloomberg) -- Investors should sell the euro against the U.K. pound as slower economic growth will prompt the European Central Bank to follow the Bank of England and cut interest rates, according to Citigroup Global Markets Inc.

The euro, which fell for the fifth consecutive day against the U.K. currency, may decline another 6 percent over the next three months, Tom Fitzpatrick, global head of currency strategy at Citigroup, said in an interview today.

Europe's common currency traded at 74.23 pence by 3:52 p.m. in London, from 74.41 pence yesterday in New York. It may fall to 69.95 pence in three months, Citigroup forecast.

The pound rose today against the euro and dollar after the U.K. central bank raised its inflation forecast, prompting traders to pare bets on a third interest-rate cut this year. The bank lowered its benchmark rate a quarter point to 5.25 percent on Feb. 7. ECB President Jean-Claude Trichet said that day the economic outlook for the euro zone had worsened after the bank kept interest rates unchanged at a six-year high of 4 percent.

``We've already priced in a lot in the U.K.,'' Fitzpatrick said from New York. ``The ECB may play catch-up.''

Technical charts show the euro's valuation against the pound is ``stretched,'' a team of analysts led by Fitzpatrick wrote in a note to clients published before the interview. The present pattern of the euro against the pound is ``looking like a channel top'' connected with the highs of May 2003, and ``there is a very large spread'' between the 55-day and 200-day moving averages, they said.

The euro's 55-day moving average against the pound, at 73.62 pence, compares with a 200-day average of 69.97 pence, according to Bloomberg data. Citigroup is the U.S.'s largest financial services company.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index.

To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

Last Updated: February 13, 2008 11:49 EST