Sterling fell on Thursday, extending losses against the dollar after a record fall in UK house prices provided more evidence that the domestic housing market is deteriorating and could weigh on the broader economy. British house prices fell 2.5 percent in May, its biggest drop ever, figures from the Nationwide Building Society showed on Thursday, and heightening concerns that a property market downturn may transform into a crash and further weaken the economy.

The data added to the dollar's rally against the pound that had been triggered by stronger-than-expected U.S durable goods data and comments from Dallas Federal Reserve President Richard Fisher on Wednesday that interest rates may rise "sooner rather than later".

Falling property prices are slowing growth in Europe’s second-largest economy just as rising food and fuel prices prevent the central bank from adding to three interest-rate cuts since December. The Bank of England will keep its benchmark rate at 5 percent at its June 4th-5th meeting, according to most market economists.

Due to last week’s statements from the FED it looks as though the rates may rise this year giving more dollar strength against sterling. Clients with dollar purchasing requirements over the next few months may wish to forward purchase their currency before the FED increase interest rates.