Business Standard

Pound drops to 8-month low versus euro as UK house prices fall

Related News

The weakened to the lowest level in nearly eight months against the euro as a report showed house prices fell for a sixth month in December, strengthening the case for the to expand its stimulus.

Sterling dropped to the lowest level in more than a week versus the dollar. Home prices in England and Wales slipped 0.1 per cent, the same as in November, Ltd. said today. Values are forecast to fall 1 per cent next year after a 0.3 per cent decline in 2012, the London-based property research group said. The Bank of England decided last month to halt its £375-billion ($606 billion) asset-purchase program, known as quantitative easing, designed to boost the economy.

“The move lower in the pound against the euro is a continuation of concern that the UK could lose its in 2013 and the step up in austerity will keep the economy weak and inspire more quantitative easing from the Bank of England,” said Jane Foley, a senior currency strategist at Rabobank International in London. “The weak house-price data today doesn’t argue against those concerns.”

The pound depreciated 0.2 per cent to 81.74 pence per euro as of 1:04 p.m. in London, after trading at 81.81 pence, the weakest level since May 1. Sterling was little changed at $1.6171, after falling to $1.6143, the lowest since December 14.

Standard & Poor’s lowered its outlook on Britain’s AAA credit rating to negative from stable on December 13, citing weak economic growth and a worsening debt profile.

The pound has gained 1.4 per cent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro declined 0.8 per cent and the dollar fell three per cent.

The 10-year gilt yield rose less than one basis point, or 0.01 percentage point, to 1.89 per cent. The 1.75 per cent bond due in September 2022 fell 0.045, or 45 pence per £1,000 face amount, to 98.765.

The rate dropped as much as seven basis points on December 21, the biggest decline since November 28. The two- year gilt yielded 0.34 per cent.

The rate dropped as much as seven basis points on December 21, the biggest decline since November 28. The two- year gilt yielded 0.34 per cent.

The gilt market was scheduled to close at 12:15 pm in London and will resume trading on December 27.

Gilts returned 2.2 per cent this year through December 21, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bunds gained 4 per cent and Treasuries earned 2 per cent.

Read more on:   

Read More

HDFC Bank cuts base rate by 10 bps to 9.7%

The new year, it seems, promises to bring some good news for retail borrowers.

Recommended for you


Quick Links

More news from Finance Rss icon

Banks as insurance brokers means more choice for customers

However, it still remains to be seen how many banks are willing to become brokers

HDFC Bank can now raise Rs 10,000 cr via share sale to foreign investors

The approval comes at a time when some large banks are exploring fund-raising opportunities

SBI's lending capacity to rise sharply by March 2016

The bank is set to hold a shareholders' meeting to secure an approval for its equity-raising plans next month

Back to Top