Sterling falls as weak housing data ups rate cut view
Sterling fell against the dollar on Wednesday as weaker-than-expected UK house price data heaped further pressure on the Bank of England to cut rates at its meeting on Thursday.
House prices in Britain fell 1.1 percent in November according to HBOS Plc's Halifax house price survey, well below analysts expectations that prices would be flat.
"The pound started to slide after the Halifax data as the market is still in two minds over whether the Bank of England would cut and this adds to the view that they will," said Geoff Kendrick, currency strategist at Halifax Bank of Scotland.
"Our view is that they will cut and there is still a fair bit of value to be had from selling sterling."
In a Reuters poll last week just 15 of 56 economists forecast a rate cut from 5.75 percent but analysts say chances of a move have increased.
At 0840 GMT, the pound was down 0.6 percent versus the dollar at $2.0468. The euro was up 0.3 percent at 71.90 pence.
Sterling got a boost earlier after a report in the Daily Telegraph newspaper that the British Government had drafted plans to nationalise troubled mortgage lender Northern Rock (NRK.L: Quote, Profile, Research) if it failed to strike a deal with private buyers.
Investors will look to purchasing managers index services data at 0930 GMT for further guidance on the likelihood of an interest rate cut from the Bank of England. Analysts are forecasting a figure of 52.9.
Source Supplied by Reuters