Pound Drops as Housing Prices Fuel Monetary Easing Speculation

By Lukanyo Mnyanda - Aug 28, 2012 2:56 PM GMT+0800

The pound weakened for a fourth day against the dollar amid speculation that falling house prices will push the economy deeper into a recession, making additional asset purchases by the Bank of England more probable.

Sterling was within 0.3 percent of the lowest level since Aug. 8 against the euro. Home values slipped 0.1 percent in August from July, when they also fell 0.1 percent, Hometrack Ltd. said yesterday. U.K. currency and bond markets were closed yesterday for a public holiday.

The pound dropped 0.1 percent to $1.5777 at 7:54 a.m. London time. Sterling was little changed at 79.13 pence per euro after depreciating to 79.33 pence on Aug. 24, the weakest level since Aug. 8.
Britain’s currency has lost 1.1 percent in the past month, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The dollar fell 1.4 percent and the euro gained 0.1 percent over the period.


To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net