BLBG:Pound Little Changed Versus Dollar as House Prices Rise
The pound snapped a three-day decline versus the euro after a report showed U.K. house prices rose for the first time in three months in January.
Sterling was little changed against the dollar, halting a six-day slide, before a report this week that analysts said will show the U.K. economy contracted in the fourth quarter of last year, tipping it back toward recession. Rightmove Plc said asking prices advanced 0.2 percent this month after dropping 3.3 percent in December. Gilts fell before the Debt Management Office sells 1.75 billion pounds ($2.8 billion) of 4 percent bonds due 2022 tomorrow.
âWeâre seeing a bit of respite for the pound today,â said Melinda Burgess, a currency strategist at Royal Bank of Scotland Group Plc in London. âAlthough we still see weak fundamentals for sterling, we do think it will perform slightly better than the euro.â
The pound rose 0.1 percent to 83.83 pence per euro at 10:09 a.m. London time, after falling to 84.07 pence, the weakest since March 13. Sterling traded at $1.5882 after dropping to $1.5838, the lowest since Nov. 16.
RBS forecasts the pound will appreciate to 80 pence per euro by the end of March, Burgess said. The company predicts it will decline to $1.5630 over the same period.
The pound weakened 2.1 percent this year, the second-worst performance after the yen, according to Bloomberg Correlation- Weighted Indexes which track 10 developed-market currencies. The euro advanced 1.5 percent and the dollar rose 0.5 percent.
âU.K. Growthâ
U.K. gross domestic product dropped 0.1 percent from the third quarter, according to the median forecast of 38 economists in a Bloomberg News survey. The Office for National Statistics will publish the data on Jan. 25 in London.
Benchmark 10-year gilt yields climbed four basis points, or 0.04 percentage point, to 2.05 percent. The 1.75 percent bond maturing September 2022 fell 0.31, or 3.10 pounds per 1,000- pound face amount, to 97.415.
Gilts handed investors a loss of 1.4 percent this month through Jan. 18, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bonds dropped 1.1 percent and Treasuries fell 0.3 percent.
To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
