Pound Falls Against Euro


The pound snapped two days of gains against the euro after U.K. consumer confidence dropped to a record low in July and house prices slumped more than forecast.

The British currency also weakened versus the Swiss franc after GfK NOP said its confidence index fell to minus 39, below the level reached on the eve of the 1990 recession. House prices fell 1.7 percent in July, Nationwide Building Society said today, the ninth consecutive monthly drop and more than the 1.2 percent predicted by analysts and economists.

The pound slid to 78.82 pence per euro as of 8:48 a.m. in London, from 78.59 yesterday. It was little changed at $1.9813, from $1.9818.

The pound has fallen 6.8 percent against the euro this year as tumbling house prices and accelerating inflation slowed growth in Europe's second-biggest economy. The outlook has deteriorated in the past month after ``bad news'' on retail sales, Bank of England policy maker David Blanchflower said yesterday.

Traders increased wagers the Bank of England will lift interest rates, with the implied yield on the December short- sterling futures contract rising 4 basis points to 5.73 percent. The central bank has lowered the key interest rate three times since November, to 5 percent.


TradingEconomics.com, Bloomberg
7/31/2008 6:30:31 AM