According to the Halifax report, UK house prices fell in December at the fastest pace in almost two and a half years, indicating that Labor's tax-raising budget has discouraged potential buyers.

Data from the mortgage lender showed that the average house price declined by 0.6% to £297,755, marking the second consecutive monthly drop after November's figure was revised from zero to minus 0.1%. As a result, annual price growth slowed to 0.3%.

The last time house prices fell more sharply was in August 2023, when they dropped by 1.6% month on month. The report adds to evidence that Chancellor of the Exchequer Rachel Reeves's budget, presented on November 26, has worsened housing market conditions in 2025 after higher stamp duty distorted demand. In November, the chancellor raised taxes, including a new levy on homes worth more than £2 million.

Although the chancellor is counting on a revival in consumer demand to help finance the public spending announced in the November 26 budget, if consumer spending turns out to be weaker than expected, it could leave a £40 billion hole in the public finances.

It is worth noting that the Halifax data align with recent figures from competitor Nationwide, which also reported falling prices at the end of the year. House prices in the capital fell by 1.3% during 2025 to £539,086, while in the north-east of England annual growth amounted to 3.5%.

The report also notes that the recent decline in house prices could make housing more affordable for first-time buyers, reducing the house-price-to-income ratio to its lowest level in more than a decade. Halifax analysts expect house prices to rise slightly in 2026 as mortgage costs fall and uncertainty over potential tax increases fades. However, any growth is likely to be limited amid growing concerns about job losses.

As noted above, the British pound reacted to all of this with a decline.

As for the current technical picture of GBP/USD, pound buyers need to break through the nearest resistance at 1.3460. Only then will a move toward 1.3488 become possible, a level above which a breakout will be quite challenging. The most distant target is the 1.3514 level. If the pair declines, bears will try to take control of the 1.3435 level. If successful, a break of this range would deal a serious blow to bullish positions and push GBP/USD down to the 1.3414 low, with the prospect of a further move toward 1.3387.

Regarding the current technical picture of EUR/USD, buyers now need to focus on breaking above the 1.1700 level. Only this will allow a move toward a test of 1.1720. From there, the pair could rise to 1.1740, but doing so without support from major players will be quite difficult. The most distant target is the 1.1765 high. In the event of a decline, I expect any serious action from large buyers only around the 1.1665 level. If no support emerges there, it would be preferable to wait for a retest of the 1.1640 low or consider opening long positions from 1.1616.