The pound has had a bad
morning, particularly
against the U.S. dollar, after the Nationwide building society found house
prices in the UK
fell at a record pace in May.
In its monthly survey of the sector, the Nationwide said house prices fell by a whopping 2.5% between April
and May, the biggest monthly fall since records began in 1991. It was also the
seventh fall in a row and the longest consecutive period of monthly fall since
1992.
Later rate recovered
some earlier losses on release of strong CBI data(-14% versus -26%).
That has piled the pressure on the pound as investors price in a growing
possibility of an early interest rate cut from the Bank of England.
While many think the U.S. Federal Reserve will not be cutting rates again
soon, the pressure is mounting on the European Central Bank to lower borrowing
costs by the autumn amid signs of faltering economic prospects.
The rate-setting FOMC meets
again on June 25 and is
widely expected now to keep its benchmark Fed funds rate unchanged at 2.00%,
the lowest since December 2004.
Meanwhile, the ECB has kept its rate
at a six-year high of 4% since last June and is widely anticipated to
maintain its rate until the end of the year as inflation concerns remain to the
fore.