GBP/USD trades steadily as UK house prices surge for eleventh month in a row

British pound traded little changed in proximity to highs unseen in 28 months against the US dollar on Monday, after a report showed that house prices in the United Kingdom rose for an eleventh consecutive month in December.

GBP/USD touched a daily high at 1.6500 at 8:20 GMT, also the pairs highest point since August 19th 2011, after which consolidation followed at 1.6493, gaining 0.09% for the day. Support was likely to be found at December 27th low, 1.6407, while resistance was to be encountered at August 19th 2011 high, 1.6618.

According to data by the property researcher Hometrack Ltd., released earlier on Monday, house prices in the United Kingdom rose for an eleventh consecutive month in December, as prices may continue higher also during the next year. Home prices in England and Wales climbed 0.5% in December compared to November, while on annual basis prices surged 4.4% in December.

What is more, a speculation appeared that strong housing market may spur economic recovery in the country, while the Bank of England may need to raise borrowing costs sooner than it had previously forecast.

The yield on UK benchmark 10-year government bonds decreased two basis points, or 0.02 percentage point, to reach 3.06%. UK gilts have fallen 4.8% during this year through December 27th, according to Bloomberg World Bond Indexes.

Meanwhile, the Federal Reserve Bank said on December 18th that it intends to pare back its monthly asset purchases in January to $75 billion from $85 billion, while also reinforcing its position that the benchmark interest rate will remain low for an extended period of time. Bank’s policymakers will probably trim asset purchases in increments of $10 billion over the next seven meetings before ending the program in December 2014.

Later in the day the National Association of Realtor’s (NAR) will publish data regarding pending home sales in the United States, an indicator for future housing market activity. The corresponding index probably rose 1.0% in November compared to October, according to the median estimate of experts. In October compared to September pending home sales decreased 0.6%.

Elsewhere, the pound was also little changed against the euro, with EUR/GBP cross ticking up a mere 0.02% today to trade at 0.8346 at 10:32 GMT. GBP/JPY pair was gaining 0.09% to trade at 173.43 at 10:33 GMT. The sterling has appreciated 6.9% during the past six months, demonstrating the best performance among 10 developed-nation currencies, which are tracked by Bloomberg Correlation-Weighted Indexes.