The pound fell against the dollar on speculation the Bank of England will keep the benchmark interest rate on hold as other central banks increase their rates, making the currency less attractive to foreign buyers. U.K. retail sales fell for a seventh month in October, according to an industry report. Futures trading indicates the Bank of England will keep its rate unchanged this year as the Federal Reserve continues to lift interest rates and the European Central Bank prepares to raise rates for the first time since October 2000. ``Interest-rate differentials are a key for sterling,'' said Derek Halpenny, a currency strategist from Bank of Tokyo- Mitsubishi, the second most accurate currency forecaster in the second quarter, according to a survey compiled by Bloomberg. ``It has been, over the medium term, a high-yielding currency, but that's been eroded.'' Against the dollar, the pound was at $1.7365 by 8:44 a.m. in London, from $1.7432 late yesterday. It was also at 67.49 pence per euro from 67.60 on Nov. 7. Sales in U.K. stores open at least a year fell 0.2 percent from October last year, the British Retail Consortium, a London- based lobbying group that represents 80 percent of retailers, said in an e-mailed report today. A separate release from the National Institute of Economic and Social Research showed the U.K. economy probably grew 0.4 percent in the three months through October, unchanged from the period through July. Narrowing Gap Interest rates in Britain are the highest in the Group of Seven industrialized nations. The narrowing gap in interest-rate expectations between the U.K. and its counterparts reduces the attractiveness of pound-denominated assets. The European Central Bank has kept rates at a six-decade low of 2 percent since 2003. ``Sometime next year, there is a chance rates will be higher in the U.S. than the U.K.'' said Halpenny. The yield on the three-month Libor futures contract due March 2006 is at 4.62 percent today. The contract settles to the three-month London interbank offered rate for the pound, which has averaged about 15 basis points more than the central bank's target for the past decade. The yield on the three-month Euribor futures contract due in March fell 1 basis point to 2.64 percent, after climbing 24 basis points last month. The contract settles to the three-month euro interbank offered rate, which has averaged about 14 basis points more than the ECB's key rate since the currency's introduction in 1999.