The UK's sterling extended its early morning momentum against its major counterparts on Friday morning in New York as traders reacted to a report showing that house prices in the UK fell at a slower pace in March. The pound jumped to a new multi-month high against the Japanese yen and multi-week highs against the rest of majors.

According to the report from Lloyds Banking Group Plc's Halifax division, house price index slipped 1.9% in March, slower than a 2.3% decline in February. Economists expected house prices to fall only 1.8%. The standardized average prices stood at GBP 157,326 in March, lower than GBP 160,390 in February.

On the contrary, a report by Nationwide yesterday revealed that house prices in the UK rose by an unexpected 0.9% in March, reversing the 1.9% fall in February, and ending the long streak of uninterrupted decline that started in October 2007. Economists were looking for another 1.5% decrease in March.

The pound surged to 1.4848 against the dollar by 8:30 am ET, the highest level since February 10. If the sterling strengthens further, resistance is seen at the 1.492 level. The cable that closed Thursday's trading at 1.4727 is currently worth 1.4820.

The US dollar declined immediately after the US Labor Department's report reveled that Employment continued to fall sharply in March. The report showed that non-farm payroll employment fell by 663,000 jobs in March following an unrevised decrease of 651,000 jobs in February. The drop in jobs came roughly in line with economists' expectations of a decrease of 658,000 levels.

With the continued decrease in jobs, the unemployment rate rose to 8.5 percent in March from 8.1 percent in the previous month, in line with expectations. With the increase, the unemployment rate rose to its highest level since November of 1983.

Signaling continued weakness in the service sector, the Institute for Supply Management said today that its non-manufacturing index unexpectedly fell in March and indicated the sixth consecutive month of contraction in the sector.

The ISM said its non-manufacturing index fell to 40.8 in March from 41.6 in February, with a reading below 50 indicating a contraction in the service sector. The decrease came as a surprise to economists, who had expected the index to edge up to 42.0.

Policymakers are prepared to do more to help frozen credit markets, Federal Reserve Vice Chairman Donald Kohn said today. Speaking at Wooster College in Ohio, Kohn pledged that the Fed would continue to adapt our policies as necessary in order to boost the economy while maintaining price stability.

The pound reached a new multi-week high of 1.6846 against the Swiss currency by 9:45 am ET and the pair leveled off thereafter. The pound-franc pair that closed yesterday's trading at 1.6704 is currently quoted at 1.6792. The next upside target level for the pair is seen around 1.696.

In economic news from Switzerland, the Federal Statistical Office said Swiss consumer prices declined 0.4% in March from the previous year, faster than 0.1% fall expected by economists. In February, consumer prices grew 0.2%. Month-on-month, consumer prices were down 0.3% in March, while economists expected prices to stay stable.

The pound rose to 148.76 against the Japanese yen by 8:30 am ET. This marked the highest level for the pound since November 12, 2008. The pound-yen pair, which has been trading in an upward channel for the week, is currently quoted near 147.9. The pair was worth 146.60 at Thursday's close.

The pound climbed to a new multi-week high of 0.9043 against the euro by 10:05 am ET. This may be compared to yesterday's close of 0.9145. The euro-pound pair is presently trading at 0.9086 with 0.896 seen as the next target level.

The euro showed weakness after the Germany's Federal Statistical Office said in a report that the import price index declined 6.4% year-over-year in February, after falling 5.4% in January. This was the biggest price decline since 1999, when prices fell 6.6%. A year ago, prices were up 4.8%.

Looking ahead, the Fed Chairman Ben Bernanke is due to deliver closing keynote address to Richmond Fed Bank's 2009 Credit Markets Symposium in Charlotte, North Caroline at 12 pm ET.

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