The pound was little changed against the dollar and euro as an industry report showed U.K. house prices dropped in August. Sterling was about 0.3 percent from a two-month high against the dollar after the Confederation of British Industry raised its forecasts for U.K. economic growth this year. Home values dropped 1.8 percent in August, the first monthly decline this year, property-website operator Rightmove Plc said today. Prices are still up 5.5 percent in the past year. The pound traded at $1.5611 as of 7:41 a.m. London time after rising to $1.5657 on Aug. 16, the highest since June 19. Sterling was at 85.30 pence per euro after appreciating to 85.05 pence on Aug. 15, the strongest since July 3. The CBI’s quarterly forecasts show the U.K. economy expanding 1.2 percent this year and 2.3 percent in 2014. That’s up from 1 percent and 2 percent projected in May. The London-based group also said that the unemployment rate, which the Bank of England has set as the key indicator for its guidance on policy, will fall to 7.6 percent next year after staying at its current 7.8 percent in 2013. The pound has strengthened 4.7 percent in the past six months, the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro gained 2.7 percent and the dollar climbed 3.2 percent. Gilts lost investors 4.7 percent this year through Aug. 16, according to Bloomberg World Bond Indexes. German securities dropped 2.3 percent and Treasuries declined 3.6 percent. To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

Source