British Pound Collapse Continues As House Prices Plunge 10.9%, BOE Leaves Rates Stead

[DailyFx]

The British pound has plunged nearly 2,500 points since mid-July, and ended Thursday testing 1.7575 as the outlook for the UK remains grim.



The Bank of England’s rate decision was essentially a non-event, as the left rates at 5.00 percent and did not issue a monetary policy statement (since there was no change in rates). Nevertheless, Credit Suisse overnight index swaps are still pricing in nearly 100bps in rate cuts by the BOE within the next 12 months, as HBOS house prices fell 10.9 percent in August from a year earlier. The UK housing market remains in shambles, with the sector’s recession rivaling that of the US. The fear amongst UK central bankers is that it will have a similar impact on not only the economy at large, but also the credit markets.


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