Pound Falls on House Price Data

By TraderVox.com

Tradervox (Dublin) – The pound weakened against the US dollar today after a report by a London-based Royal Institution of Chartered Surveyors showed that the UK house price index fell to six month low in April. The demand for houses weakened after a stamp-duty exemption for first time buyers ended in March 24. The index fell to -19 from -11 in March registering the lowest level since June 2010. A reading below zero indicates that more surveyors registered a price drop than gains in the last month. This report came as Britain’s property market struggles to recover from the first double-dip recession in the country since 1975.

After the report was released, the Great Britain Pound fell within two cents of an eight month low against the dollar. Despite an increase of 4.3 percent within the last three month, the pound dropped by 0.3 percent against the dollar to trade at $1.6143 during the London trading session after it had rose to 1.6302 on April 30, the strongest it has been since August 31 last year. The sterling pound was little changed against the euro buying one euro at 80.65 pence, it had climbed to 80.36 pence per euro yesterday when the Euro dropped following elections in the region.

According to Peter Bolton Kings, a spokesman for Royal Institution of Chartered Surveyors, the consumer confidence was undermined by the recent talk of double-dip recession and current concerns over the economy of the nation. He also added that the lack of affordable mortgage has contributed to the declining first-time house buyers. Analysts have said that the boost in demand seen early this year was due to the tax exemption on purchases of houses costing less than 250k pounds which expired on March 24.

The Bank of England is expected to publicize its policy decision on may 10 prior to new quarterly economic forecasts expected to be released next week. The market is expecting a no change in the bond-purchases target and interest rate.

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