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Pound slips despite healthy signs

Robert Chote
Tuesday 04 May 1993 23:02 BST
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THE POUND dropped by nearly two pfennigs against the German mark yesterday, despite surveys showing rising house prices, stronger business activity and signs that the recession in construction is bottoming out, writes Robert Chote.

Sterling was hit by profit-taking ahead of Thursday's Newbury by- election and amid fears that the Government faces defeat in a Commons vote on the Maastricht treaty. The pound fell 1.88 pfennigs to DM2.4696 and shed 0.4 points to close at 80.6 per cent of its 1985 value.

But house prices are definitely edging up, according to Nationwide Building Society. It reported that prices rose 0.1 per cent in April - the second successive monthly increase. This brings the annual price fall to 5.8 per cent. The price of the average property rose pounds 28 to pounds 52,339.

Business activity and optimism is also improving, according to a separate survey by Trade Indemnity, the credit insurance group. It showed activity stronger in the first quarter than at any stage of 1992.

Work in hand at chartered surveyors' practices fell by 0.7 per cent in the first quarter of 1993, according to the Royal Institution of Chartered Surveyors. This compared with a 5 per cent drop in the previous quarter, adding to signs that the construction recession is bottoming.

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