Pound pressured by soft housing report

Worries about a sharp slowdown in the property sector in Britain - where two in three people own their home - have contributed to expectations of further monetary policy easing from the Bank of England.

Housing researchers Hometrack said house prices were 0.9 percent down on the year in April, having posted a 0.4 percent annual gain in March—the weakest figure since January 2006.

Most economists expect the Bank’s next cut, from the current 5 percent, in June but say that a run of weak data over the next week would boost the chances of a move as soon as May.

“The domestic news remains relatively weak … Our own view is that the UK economy does have problems, and we expect growth to decelerate markedly in the second half of the year and that buy itself is likely to ay on sterling over the remained of 2008,” said Robert Minikin, senior FX Strategist at Standard Chartered.

By 8:21 a.m. BST, the euro was up 0.25 percent on the day at 78.97 pence, though still around two pence below record highs set earlier this month.

Sterling was down 0.3 percent at $1.9789, with the dollar broadly supported by expectations that the Federal Reserve may pause in its aggressive rate cutting cycle after this week’s expected easing.

However there were some signs of UK economic resilience, with Whitbread, the owner of Britain’s biggest hotel and coffee shop chains, reporting a bigger than expected 26.3 percent rise in annual pre-tax profit.

(Reporting by Toni Vorobyova; Editing by Mike Peacock)