Sterling falls in the aftermath of property report

Following a report by the UK’s fourth largest mortgage provider, the Nationwide Building Society, the pound is now at a one-week low against the dollar as the industry report showed how house prices have fallen at their sharpest rate for over 17 years.

The announcement that the average home in the UK has seen 2.5 percent wiped off their value, coincided with the pound falling against 10 of its 16 major currencies.

The house-price survey has been negative for the pound because the faltering house prices are hurting the UK economy and consumer consumption, as house prices are integral to consumer confidence.

The UK currency fell to $1.9673 against the dollar and it is at its the lowest level since May 21.

UK government bonds have also fallen as European stocks have reduced the demand for the safer assets.

Meanwhile, the pound had fallen against the most traded currencies such as the Brazilian real and South African rand.

Similarly the situation of the housing market is likely to get worse as per Mervyn King’s statement and, as a result, the future of the pound is uncertain.

Analysts predict that the Bank of England will lower the lending rate to 4.75 percent by the end of the third quarter and is likely to hit 4.50 percent by the end of the year.

Story link: Sterling falls in the aftermath of property report