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By Bloomberg

The pound weakened versus the dollar before before the Bank of England publishes minutes of its most recent policy meeting, with traders awaiting signals on the institution’s outlook for interest rates amid slowing inflation.

Sterling was little changed against the euro before a report economists said will show U.K. unemployment fell to 5.9 percent in the three months through October, the lowest since 2008. The nation’s government bonds advanced yesterday, pushing 30-year yields below 2.5 percent for the first time, as the lowest inflation rate in more than a decade boosted demand for the fixed payments on gilts.

The pound dropped 0.1 percent to $1.5734 as of 7:16 a.m. London time after climbing 0.7 percent yesterday, the biggest advance since Oct. 15. The U.K. currency was at 79.41 pence per euro.

Sterling has gained 7 percent in the past year, the best performer after the dollar among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The greenback surged 11 percent, while the euro fell 0.4 percent.

U.K. gilts have been supported as the global inflation outlook crumbles amid plunging commodity prices, leading traders to pare back wagers on higher borrowing costs. A measure of Britain’s inflation outlook dropped to the lowest in more than two years yesterday, as the price of Brent crude oil dropped below $60 a barrel for the first time since July 2009.

Rate Outlook

The BOE’s key interest rate has been at a record-low 0.5 percent since March 2009. Two of the Monetary Policy Committee’s nine members voted for a quarter-point rate increase in November.

U.K. inflation in coming months “is going to be low,” BOE deputy governor Jon Cunliffe said in a BBC Radio interview today.

Forward contracts based on the sterling overnight interbank average, or Sonia, show investors aren’t expecting a 25 basis- point increase in the rate before the end of November next year. As recently as August, the market was priced for an increase in February.

Benchmark 10-year gilt yields fell three basis points, or 0.03 percentage point, to close at 1.78 percent yesterday and touched 1.69 percent, the lowest level since May 3, 2013. The rate on 30-year gilts dropped to 2.439 percent, the least since Bloomberg started collecting the data in 1996.

The 10-year break-even rate, a measure of the outlook for retail-price inflation derived from the difference in yield between gilts and inflation-linked securities, fell for a seventh day yesterday and reached 2.49 percent, the lowest since November 2012.

Gilts returned 15 percent this year through yesterday, according to Bloomberg World Bond Indexes. German securities earned 10 percent and U.S. Treasuries 6.7 percent.