The pound fell against the euro for the first time in three days after Bank of England Governor Mark Carney said surging house prices posed the biggest risk to the U.K. economy.
Sterling was little changed versus the dollar as Rightmove Plc said asking prices for London homes jumped to a record this month. Futures traders reduced bets that the pound will rise against the U.S. currency for a fourth week and UBS AG said investors should sell sterling against the greenback as the market has overpriced interest-rate increases. Carney said last week the central bank is prepared to wait until next year to increase borrowing costs as there remains slack in the economy.
“The U.K. housing market has a deep structural issue that could undermine the economy and is negative for the pound,” said Geoffrey Yu, a senior currency strategist at UBS AG in London. “It’s unlikely the Bank of England will use an interest-rate increase as a policy tool to rein in the market, unless as a last resort.”