British Pound weakened. How about UK economy?8 April, 2008, 14:16. Posted by Zarathustra
Tags: Currency, Economy, UK
The pound fell to a record against the euro after the U.K.’s biggest mortgage lender said house prices dropped by the most since 1992 last month, adding to the case for an interest-rate cut this week.
Britain’s currency also declined to a six-week low versus the dollar after HBOS Plc said the average cost of a home fell a more-than-forecast 2.5 percent as high street banks restricted mortgage lending amid the credit squeeze. The Bank of England will cut its main rate a quarter-point to 5 percent on April 10, according to 50 of 61 economists in a Bloomberg News survey.
Government bonds rose on expectations for lower rates, with the yield on the two-year note falling 3 basis points to 4 percent. The price of the 4.75 percent security due June 2010 gained 0.06, or 60 pence per 1,000-pound ($1,967) face amount, to 101.54. The yield on the 10-year gilt dropped 2 basis points to 4.49 percent. Yields move inversely to bond prices.
It is interesting that since I wrote once about the UK economy in my very first post here, I have not really touched on UK. And actually, UK economy has never really been in the spotlight in this subprime mortgage crisis. While some commentators thought that the problems UK is facing are far more serious than what US is facing, there seems to be nothing serious that brought our attention to (except Northern Rock). But hidden risks might be all around.