Pound stronger despite house price news

The pound strengthened versus both the euro and the US dollar Monday even though Rightmove (LSE: RMV) reported that the average asking price for a house in the UK dropped 2.3 percent in December.

The online property search service said the new decline brings house prices to 10 percent below their peak in May and that it expects another 10 percent decline next year.

In early afternoon trade in New York, the pound traded at 89.4p to the euro while it took $1.5289 to buy a pound.

Meanwhile, the US dollar weakened in anticipation of Tuesday’s meeting of the Federal Reserve, when the Fed is expected to cut US interest rates again, possibly to as low as 0.25 percent.

Also hurting the greenback was the news that the New York Fed’s general economic index fell from minus 25.4 in November to minus 25.8 this month, signaling that the New York region’s manufacturing activity remains in contraction, while a report from the US Treasury said that international demand for long-term US assets weakened again in October.

At around 1:30 p.m. in New York, the dollar traded at $1.3669 to the euro while the yen was at ¥90.76 to the greenback.

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