Pound Drops the Most in Four Months as Rally Wanes on Rate Bets

The pound declined the most in four months against the dollar this week as a rally that made it the best-performing currency in the past year was deemed to be losing momentum.

Sterling fell below $1.70 for the first time in a month after retail sales increased less than economists forecast and comments from the Bank of England damped investor expectations for higher borrowing costs. Benchmark 10-year gilt yields dropped to the lowest in eight weeks as central bank Governor Mark Carney said this week that rate increases would be more restrained than in the past as “extraordinary forces” were still confronting the British economy.