BLBG: Pound Near One-Month Low Versus Euro After February House Prices Decline
The pound traded within one penny of its weakest level against the euro in more than a month after a report showed U.K. house prices fell in February.
Sterling was little` changed against the dollar before a U.S. employment report. British home values fell 0.9 percent from January, when they rose 0.8 percent, Halifax said today. U.S. employers probably added the most jobs since May, with nonfarm payrolls expected to have increased by 196,000 in February, according to a Bloomberg survey of economists before the Labor Department report.
“The move in the pound today is mainly a consequence of people taking some profit because of the nervousness ahead of the nonfarm payrolls data,” said Chris Huddleston, a trader at Investec Bank Plc in London.
The pound was little changed at $1.6288 and 85.77 pence per euro as of 12 p.m. in London. The British currency gained for a fifth day versus the yen, adding 0.3 percent to 134.59.
Sterling slid the most in a week against the euro yesterday after European Central Bank President Jean-Claude Trichet said interest rates may rise next month, increasing the euro area’s yield allure over the U.K. “Strong vigilance” must be exercised as inflation risks deepened, Trichet told reporters in Frankfurt after the ECB left its main rate unchanged at a record-low 1 percent.
The average value of a home last month was 162,657 pounds and prices will fall 2 percent this year, the mortgage unit of Lloyds Banking Group Plc said.
‘Less Hawkish’
“Worse than expected economic data would persuade the BOE to be less hawkish on rates,” said Wilson Chin, a senior interest-rates strategist in London at HSBC Holdings Plc, Europe’s biggest bank by market value.
Investec expects the Bank of England to raise interest rates by 25 basis points in August, followed by another 25 basis-point increase in November, the brokerage said on March 2. The company had previously predicted that the first rate increase would be in November, the e-mail said.
U.K. two-year notes rose, reducing yields by two basis points to 1.42 percent. Ten-year yields fell five basis points to 3.67 percent.
To contact the reporter on this story: Garth Theunissen in London gtheunissen@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
