Sterling falls as weaker housing market weighs
LONDON, Nov 19 (Reuters) - Sterling fell versus the euro and dollar on Monday as data showing a weaker housing market suggested high interest rates are starting to affect the UK economy, adding to sentiment that rates are set to fall.
British annual house price inflation in England and Wales dropped to 7.9 percent year-on-year in the month to Nov. 10 from 10.4 percent in the previous month, a survey by property website Rightmove showed on Monday.
The survey showed house prices fell on the month in all regions bar London with an overall 0.7 percent fall for the month, indicating that five interest rate hikes since August 2006 are starting to bite.
British house builder Barratt Developments said the UK housing market had tightened due to higher interest rates and financial market turmoil.
"(The data) confirms the underlying weakness in the housing market and a soft underlying tone remains at the moment," said Adrian Schmidt, currency strategist at RBS Global Banking.
At 0854 GMT the pound was down a quarter percent against the dollar at $2.0478. The euro was up 0.15 percent at 71.49 pence.
Heightened expectations of interest rate cuts hit the pound last week after a dovish quarterly inflation report from the Bank of England.
Investors are pricing in at least two interest rate cuts for next year and they will look to further clues on the prospects for rates when the minutes of the Bank of England Monetary Policy Committee are published on Wednesday.
Source supplied by: Reuters