Sterling slipped to its lowest in nearly two weeks against a basket of currencies on Thursday after data showed UK house pricing falling at their fastest pace in 2 years, rekindling talk of a UK interest rate cut. Data from the Royal Institution of Chartered Surveyors on Thursday was the latest in a line of soft news from the Britain's housing market.
Sterling had rallied earlier this week after expectations of a near-term UK rate cut were cooled when the Bank of England Governor Mervyn King said Britain's economy would need to slow over the coming year to keep inflation risks at bay.
"There is profit taking on what had been quite a rise, so that (the housing data) was probably an excuse to take some of that back in profits, to lock it in," said Trevor Williams, head of group economic research at Lloyds TSB Corporate Markets
"It's clearly a sign that the economy will slow in 2008. Any number which suggests weaker growth and may be more chance of a cut interest rates (is negative for sterling)." By 1451 GMT sterling was down 0.2 percent at $2.0377, retreating from a one-week high of $2.0476 set on Wednesday in the aftermath of the King comments.
The euro rose as high as 69.76 pence, its strongest since October 1 and closing in on 2-1/2 year peaks of 70.29 pence set in late September. On the Bank of England's trade-weighted basis, sterling fell 0.5 percent to its lowest in nearly two weeks at 102.3.