Sterling fell versus a broadly stronger dollar on Friday, ending the week on a subdued note after weak UK housing numbers contrasted with higher than expected US inflation data.
Both Halifax and Nationwide predict flat house prices in 2008 and the Royal Institution of Chartered Surveyors posted its most negative reading in its balance for house prices since May 2005.
This damaged sentiment for the pound while the dollar benefited from data showing that inflation rose at its fastest pace in more than two years in November.
"The dollar is stronger as economic data is making people think that rates might not go down as much as expected while a slowing economy in the UK means rates are coming down," said Paul Robson, currency strategist at RBS Global Banking. At 1521 GMT the pound was down 1 percent versus the dollar at $2.0208. The euro was down 0.3 percent at 71.44 pence.
Also weighing on sterling were comments from Bank of England MPC member Kate Barker who said that the pound's recent fall on the foreign exchanges has been good news for Britain's manufacturers. Next week investors will look to UK inflation data on Tuesday and minutes from the MPC's December meeting on Wednesday.
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