Home > Market News > Pound Weakens Third Day Versus Dollar as House Prices Unexpectedly Slide

Pound Weakens Third Day Versus Dollar as House Prices Unexpectedly Slide

The pound fell for a third day against the dollar as a report showed house prices unexpectedly dropped, adding to signs the U.K.’s economic recovery is faltering and strengthening the case for record-low interest rates.

The pound fell for a third day against the dollar

Sterling traded within a penny of its weakest level in three weeks against the euro. The average price of a house fell 0.6 percent last month, after increasing by a revised 0.3 percent in July, Nationwide Building Society said in a statement today. The median prediction of nine economists surveyed by Bloomberg was for prices to be stagnant. GfK NOP Ltd. said yesterday an index of consumer sentiment slipped this month.

The pound fell 0.1 percent to $1.6232 at 9:02 a.m. in London, extending last month’s 1.1 percent decline. Sterling was at 88.10 pence per euro, after depreciating yesterday to 88.85 pence, the weakest level since Aug. 10. The euro lost 0.5 percent to $1.4305.

U.K. government bonds rose, with the 10-year gilt yield falling two basis points to 2.58 percent, after rising to 2.64 percent, the highest since Aug. 10. The 3.75 percent security due September 2020 rose 0.170 or 1.70 pounds per 1,000-pound face amount, to 109.335. Two-year yields fell two basis points to 0.57 percent.

Gilts have handed investors a 7.2 percent return in 2011, compared with 5.2 percent from German debt and 7.2 percent from U.S. Treasuries, according to the European Federation of Financial Analysts Societies. Gilts gained 2.7 percent in August, the indexes show.

Britain plans to sell 3 billion pounds of 3.75 percent bonds maturing in 2021 today.

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