May 24 (Bloomberg) -- Berkshire Hathaway Inc. Chairman Warren Buffett, said the British pound, headed for a second consecutive monthly decline, may be poised to resume a three-year rally against the dollar.

``I am a bull on sterling versus the U.S. dollar,'' he said on a teleconference with reporters in London after MidAmerican Energy Holdings Co., a company controlled by Berkshire, agreed to buy PacifiCorp for $5.1 billion in cash. ``This may well continue despite the movements of the last few weeks.''

The pound is down 4 percent against the U.S. currency this month as the Bank of England cut its growth forecasts, an industry report showed retail sales fell the most in a decade and a gauge of house prices dropped for a second month.

Against the dollar, the pound traded at $1.8278 at 3:55 p.m. in New York from $1.8303 late yesterday in New York. The U.K. currency advanced 25.3 percent the last three years as the Bank of England raised interest rates and the dollar fell against the currencies of its major trading partners. MidAmerican is buying PacifiCorp from Glasgow-based Scottish Power Plc.

Buffett told Berkshire's annual meeting of shareholders in Omaha, Nebraska, on April 30 that he's keeping his bet against the dollar, which stood at $21.8 billion on March 31. The position caused a $307 million first quarter pre-tax loss as the dollar advanced, the company said on May 6. He declined to say which currencies he invests in.

Interest Rates

``I probably side with Buffett and declare myself a pound bull,'' said Mario Kelly, one of the two founders of Wallwood Consultants Ltd., the second most accurate forecaster of the pound against the dollar in the first quarter of this year in a Bloomberg survey. ``Interest rates are higher than Japan, the U.S. and Europe, so that attracts investors.''

Bank of England policy makers have held their benchmark rate at 4.75 percent since August, after raising the rate from 3.5 percent, in five quarter-point moves from November 2003. The Federal Reserve raised its target rate for overnight loans between banks by a quarter point to 3 percent on May 3.

London-based Wallwood, founded by Kelly and Daryl Swain in 1998 after losing their jobs as currency traders when their employer cut costs, said the pound may gain to $1.88 by year-end.

Trade Deficit

Buffett and Bill Gates, chairman of Microsoft Corp., are among investors who have bet against the dollar. Buffett's firm made $1.63 billion on foreign currencies in the fourth quarter, when the dollar fell to a record $1.3666 per euro. He began betting against the dollar in 2002 on concern widening U.S. trade and budget deficits would erode its value.

``Our view is actually a little bearish on the pound,'' said Adrian Schmidt, head of currency strategy in London at Royal Bank of Scotland Group Plc, Britain's second-largest bank by assets. ``Buffett has a short dollar position so one assumes he has to justify that to his shareholders, so he's saying he still likes the position.''

Schmidt predicts the pound will weaken to $1.81 in six months.

To contact the reporter on this story: Jake Lee in London jlee27@bloomberg.net Elena Moya in London moya@bloomberg.net

Last Updated: May 24, 2005 15:57 EDT