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UK pound sags to record lows on house price crash

The pound fell to a record low of 90 pence (Dh5.06) per euro after an industry report showed house prices extended declines in December as the recession battered Britain's economy.

  • Bloomberg
  • Published: 23:57 December 15, 2008
  • Gulf News

London: The pound fell to a record low of 90 pence (Dh5.06) per euro after an industry report showed house prices extended declines in December as the recession battered Britain's economy.

The pound also dropped against the Swiss franc and the yen as traders bet the Bank of England will reduce its key interest rate by at least a quarter-percentage point to 1.75 per cent on January 8. The UK currency slid last week after the US Senate's rejection of a $14 billion rescue plan for automakers sent stocks tumbling as demand for riskier assets evaporated.

"Still look for further pound weakness ahead with a testing of an all-time low for the sterling-deutschemark equivalent," said Neil Jones, head of European hedge fund sales at Mizuho Capital Markets in London. "History is repeating itself."

The pound was at 89.94 pence as of 11:50am. in London and traded as low as 90.04 pence, from 89.48 last week. The pound may weaken soon to 91.50 pence per euro, the equivalent of an all-time low against the German mark, Jones said.

The average house price advertised by sellers fell 2.3 per cent on the month, Rightmove Plc, the operator of the UK's biggest residential property Web site, said on Monday.

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