The Pound Sterling to US Dollar (GBP/USD) exchange rate softened to its lowest level in a month following the release of disappointing UK house price data and as investors look ahead to the Bank of England’s (BoE) latest interest rate decision.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a session low of 1.5221
Data released by Halifax showed that UK house prices fell by 0.3% in February, a figure that was worse than the 0.2% decline forecast by economists. In January, UK house prices increased by 1.9%, downwardly revised from 2%.
U.K. house prices in the three months to February were 8.3% higher than in the same three months a year earlier, below forecasts for a gain of 8.5% gain and down from an increase of 8.5% in January.
The dip in prices was said to be the result of increasing jitters ahead of May’s General Election. With no clear winner, the outcome of the vote remains uncertain. The uncertainty is causing businesses and individuals to grow cautious.
News that the Serious Fraud Office (SFO) is investigating the BoE’s money lending activity at the height of the financial crisis also put pressure on the Pound.
‘Following the confirmation by the SFO that it is investigating material referred to it by the Bank of England, the bank can now confirm that it commissioned Lord Grabiner QC to conduct an independent inquiry into liquidity auctions during the financial crisis in 2007 and 2008. Given the SFO investigation is ongoing, it is not appropriate for the bank to provide any additional comment on the matter at this time,’ said the Bank in a statement.
The Pound is likely to experience volatility later in the session as the BoE is expected to leave its benchmark interest rate at the record low level of 0.5% and maintain its monthly bond-buying programme at £375 billion.
US Data Ahead
The US Dollar meanwhile remains supported from Wednesday’s data releases, which showed that the US services sector grew at a faster pace than forecast last month.
The strong report countered the disappointment generated by a softer ADP employment report and caused traders to raise their expectations that the Federal Reserve is edging closer to raising interest rates.
The US Dollar could push higher later in the session if upcoming Jobless Claims and factory orders data come in strongly.
