Pound Plunges to its Lowest in One Week as U.K. Housing Prices Decline

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Pound Plunges to its Lowest in One Week as U.K. Housing Prices DeclineThe pound hit its lowest level in one week versus the dollar on a report that showed that U.K. housing prices unexpectedly plunged in March, indicating that the economic growth is faltering.

The sterling appeared to head for its fourth weekly decline over the last five weeks against the dollar after earlier rising to its highest level since November 2009 in March.

“The pound has been toppish for a while and it is likely to retreat from current levels,” Geoffrey Yu, a London-based senior currency strategist at UBS AG told Bloomberg. “We expect the Bank of England to start raising interest rates in February. Unless there are strong upside surprises in economic data that will bring forward market expectations for rate increases, I see limited scope for sterling to outperform.”

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The sterling was down 0.1 percent at $1.6577 as of 4:03 p.m. in London trade, after earlier touching $1.6556, its lowest point since March 27. Against the euro, the pound remained unchanged at 82.56 pence a euro, after earlier declining to 83.15 pence on Thursday, also the lowest level since March 27.

So far, the pound, which has advanced 10 percent over the past year, is the best performing of the 10 developed-nation currencies monitored by Bloomberg Correlation-Weighted Indexes. The dollar has gained 0.3 percent while the euro climbed 6.8 percent.

British house prices fell 1.1 percent in March from February, when they grew at a rate of 2.5 percent, according to a statement by Halifax in London.

Gilts advanced after a report by U.S. Labor Department showed that U.S. companies hired 192,000 more workers in March, which was less than the average estimate of 200,000 in a Bloomberg poll of economists.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com