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Pound Falls to 6-Week Low Against Dollar as House Prices Slide Lukanyo Mnyanda The pound fell to a six-week low against the dollar as a report showing house prices slumped last month added to evidence the U.K. economy is slowing, fueling speculation the central bank may have to cut interest rates. The pound also slid to the lowest in more than a week against the euro as a survey showed consumer confidence fell the most in at least three years in November, and the Times reported U.K. mortgage lenders may face a 30 billion pound ($61.8 billion) funding shortfall next year. The Bank of England began its two- day policy setting meeting today. ``Sterling's extremely vulnerable and we're likely to see more weakness,'' said Ian Stannard, senior currency strategist in London at BNP Paribas SA, France's biggest bank. ``The data is likely to deteriorate further, and the pressure's on the BOE to cut interest rates.'' Against the dollar, the pound slumped 1 percent to $2.0399 at 9:52 a.m. in London, from $2.0592 yesterday. It traded as low as $2.0352, the weakest since Oct. 23. It was at 72.19 pence to the euro from 71.68. It bought 225.04 yen from 226.23 yen.
The British currency may fall to 72.55 pence by year-end and finish the first quarter of 2008 at about 74, Stannard said. The average cost of a home in Britain slipped 1.1 percent from a month earlier, after a 0.7 percent drop in October, a report by HBOS Plc said today. The drop was the third in as many months. The Times newspaper said the Bank of England needs to take steps to relieve the liquidity squeeze, citing Michael Coogan, director general of the Council of Mortgage Lenders. Northern Rock Plc was bailed out by the central bank in September after short-term credit costs made the bank unable to get funding.
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