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Fragile UK Housing Market Hinders The Pound

The Pound hit a four month high against the Euro but has experienced a mixed twenty-four hours against the Dollar. It lost some ground due to poor house price figures yesterday, followed by a very cautious outlook report from the British Chamber of Commerce today that has estimated slowing growth in the fourth quarter of 2010.

The British Chamber of Commerce estimates that the economy expanded by 0.4-0.5 percent in October-December, slowing down from the 0.7 percent official figure for July-September. Although the report labeled a new recession as ‘unlikely’ it highlighted the fragile nature of the recovery, saying that the services sector was responsible for much reduced output. The report has dampened sentiment that the Uk economy was getting back on its feet coming on the same day as the British Retail Consortium highlighted falling Uk retail sales last month due to adverse weather conditions.

The news comes two days before the next Bank of England monetary policy meeting. Fortunately for Sterling, Euro weakness continues to dominate market movements, but the outlook for the Uk economy looks a little more fragile.