Pound Falls to One-Month Low as House Prices Slide; Gilts Gain

The pound fell to a one-month low against the dollar after an industry report showed U.K. home sellers cut asking prices by the most in a year amid concern the economic-growth outlook is deteriorating.

Sterling dropped the most in a week versus the yen as Prime Minister David Cameron said Britain is “well behind” where it needs to be on economic growth and the euro-area crisis was having a “chilling” effect on growth. The FTSE 100 Index of shares dropped for a sixth day, falling 2.4 percent. Ten-year gilts rose.

“The housing data was pretty poor, one of the worst prints for a while,” said Chris Walker, a foreign-exchange strategist at UBS AG in London. “There’s a general tone of dollar buying, which is having an effect on cable,” he said, referring to the pound-dollar exchange rate.

The pound depreciated 1.1 percent to $1.5640 at 4:32 p.m. London time, after dropping to $1.5613, the lowest level since Oct. 12. Sterling fell 0.9 percent to 120.42 yen, after sliding as much as 1.2 percent to 120.05, the biggest intraday decline since Nov. 14. The U.K. currency weakened 0.9 percent to 86.36 pence per euro.

Average asking prices for houses in England and Wales slid 3.1 percent from October, the largest drop since November 2010, Rightmove Plc said in a report published in London. All 10 regions showed falling asking prices, the first time in more than three years they all declined together, the company said.

‘Massive’ Plan

“We need to deal with our debts and go for growth,” Cameron said at an event in London today organized by the Confederation of British Industry. The government is working on a “massive” credit-easing plan, he said.

Chancellor of the Exchequer George Osborne will use his statement to Parliament on Nov. 29 to set out full details of the program to aid companies finding it hard to obtain bank finance, Cameron said in the speech.

“Paralysis in the euro zone is causing alarm in the markets and having a chilling effect on economies in many countries, including our own,” he said.

Bank of England Governor Mervyn King said last week the U.K. economy faces a “markedly weaker” outlook amid persistent danger from the turmoil in the euro area. Speaking at a Nov. 16 press conference, King said growth may be “broadly flat” in the first half of 2012.

12-Month Decline

The pound has weakened 3.7 percent in the past 12 months, the second-worst performer after the New Zealand dollar among 10 developed-market peers measured by Bloomberg Correlation-Weighted Currency Indexes.

Ten-year gilts snapped a three-day decline as investors sought safer assets amid speculation U.S. lawmakers will fail to agree on spending cuts and Europe will struggle to fix the region’s debt crisis.

The 10-year gilt yield fell six basis points, or 0.06 percentage point, to 2.19 percent. The 3.75 percent bond due September 2021 rose 0.570, or 5.70 pounds per 1,000-pound face amount, to 113.655. The two-year rate was little changed at 0.48 percent.

The yield on German 10-year bunds, the euro area’s benchmark sovereign securities, declined seven basis points to 1.90 percent. Treasury 10-year yields fell six basis points to 1.95 percent.

Gilts have returned 14 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German debt gained 7.9 percent and U.S. Treasuries rose 9.1 percent, the indexes show.

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