Pound Drops Against Dollar as House Prices Unexpectedly Fall

The pound declined against the dollar as a report showed house prices fell last month, signaling the U.K.’s economic recovery will be slow.

Sterling strengthened for a second day versus the euro. The average cost of a home in Britain slipped 0.1 percent in December, Nationwide Building Society said in an e-mailed statement today. The median prediction of 11 economists surveyed by Bloomberg was for prices to remain unchanged. From a year earlier, values were down 1 percent, the Swindon, England-based customer-owned lender said.

The pound lost 0.2 percent to $1.6229 at 8:40 a.m. London time, after reaching $1.6381 yesterday, the strongest level since Aug. 30, 2011. Against the euro, the pound gained 0.1 percent to 81.07 pence.

U.K. gilts were little changed, with the 10-year yield at 1.99 percent. Yields jumped 16 basis points yesterday.

Sterling has gained 1.9 percent in the past 12 months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro declined 1.3 percent and the dollar fell 2.1 percent.

To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net

To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net