British Pound the Strongest of the Majors as UK House Price Declines Slow

The British pound was once again the strongest of the majors, gaining over 1.5 percent against the US dollar, as the UK’s Department for Communities and Local Government (DCLG) said that house prices were down 13 percent in April from a year earlier, up from -13.6 percent in March. This was the first time since October 2007 that the index did not reflect an accelerated drop in prices, suggesting the UK’s housing market collapse may be nearing a bottom. Meanwhile, Bank of England (BOE) Monetary Policy Committee (MPC) member Paul Tucker said during a speech that despite some improvement in near-term indicators, the medium-term outlook was “highly uncertain” as it was not year clear “whether the financial system can generate the expansion of credit that will most likely be necessary to support recovery.” On quantitative easing, Tucker said that the “mildly upward sloping money market curve, which signals that the market is confident – as it should be – that the MPC will retighten monetary conditions when in due course that is warranted by the medium term outlook for inflation.” All told, Tucker’s comments signal cautious optimism, which may be the general sentiment amongst the MPC members as a whole.

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