Sterling regains footing against the US dollar; UK homebuilders to build more homes

The British pound rose against the US dollar on Tuesday, as concerns over a US economic recession prompted traders to dump the greenback—despite the pound’s seventh consecutive day of decline against the euro. The pound gained 0.4% to $1.2931, following last week’s 2.7% surge, as fears that tariffs could slow US economic growth drove traders to sell dollars. From the UK perspective, attention this week will centre on Friday’s release of monthly GDP data—but analysts say the pound will largely be driven by developments elsewhere in the meantime. The pound fell against the euro, briefly rising to 84.445 pence—the highest since late January—before giving back some of those gains. It ultimately rose 0.1% to 84.235 pence. Brighter growth prospects for the eurozone—and a package of reforms including changes to Germany’s ‘debt brake’—have triggered a sharp repricing of German government bonds, lending support to the euro. The yield spread between 10-year UK and German government bonds narrowed by five basis points, while the two-year spread narrowed by two basis points—both reaching their lowest levels since the end of 2024. UK housebuilder Persimmon said it will build more homes this year and is committed to improving profitability after exceeding profit expectations in 2024—sending its share price up more than 5% on Tuesday. This forecast comes amid ongoing affordability challenges across the UK housing sector. While expected Bank of England rate cuts are anticipated to provide some support, the pace of further monetary easing and domestic growth remains uncertain. “Underlying market fundamentals remain strong, and we are encouraged by further improvement in sales rates this year,” said CEO Dean Finch, noting that Persimmon’s sales rate rose 14% in the first nine weeks of 2025. Persimmon said it is “mindful” of potential impacts from persistent macroeconomic and geopolitical uncertainties, but remains confident in its ability to lift profits and shareholder returns—and aims for a 20% margin over the medium term. “While affordability has been—and may continue to be—an issue, recent rate cuts have clearly invigorated the mortgage market, especially for first-time buyers,” said Richard Hunter, Head of Markets at Interactive Investor. Persimmon plans to build 11,000–11,500 homes in 2025—up from 10,664 last year. After costs rose nearly 8% in 2024, the company aims to limit cost growth this year to low single digits.

Same UK housing market—why is one developer profitable while another’s share price plummets?

Same market. Same season. Two UK residential developers—yet wildly divergent storylines. On 10 February 2026, Bellway—a Newcastle-based housebuilder—released its half-year results, and its share price jumped over 3%. Just one day later, on 11 February, Barratt Redrow—the UK’s largest residential developer—published its financial report, triggering an immediate share price plunge of more than 7%. That slide did not stop there: over the following month, Barratt Redrow’s share price continued falling—by late March 2026, its cumulative decline had approached 33%, wiping out nearly £2 billion in market value and even raising the risk of being demoted from the FTSE 100 index. Two reports, released almost back-to-back—so why such starkly different outcomes? Understanding the logic behind them means understanding what’s truly happening in the UK housing market right now. 1. Bellway: Sailing upstream Bellway reported its half-year results ending 31 January 2026. The headline numbers were unremarkable: 4,702 homes completed—a 2.7% rise year-on-year; residential revenue climbed to £1.51 billion, up over 6%; average selling price stood at around £322,000, up roughly 3.7% year-on-year. The company reaffirmed its full-year target of approximately 9,200 completions. It looked steady—yet in today’s UK housing market, ‘steady’ is the greatest strength. Last autumn, uncertainty surrounding the UK fiscal budget severely dampened buyer demand. Bellway candidly acknowledged a 10.2% drop in private reservations across the entire autumn period. But entering the 2026 ‘spring selling season’, customer inquiries and reservation volumes rebounded noticeably. More critically, Bellway entered the period holding a robust order book worth £1.24 billion—comprising 4,442 homes—with a clean balance sheet and net debt of just £72 million, maintaining leverage at around 10%. The company is also executing a £150 million share buyback programme—having already spent approximately £48 million repurchasing its own shares during the reporting period. That move itself sends a clear signal: management believes the current share price undervalues the company. 2. Barratt Redrow: Trouble begins after the merger Barratt Redrow’s story is far more complicated. At first glance, the numbers don’t look bad: In the 26 weeks ended 28 December 2025, revenue rose 10.5% to £2.6 billion; completions reached 7,444 homes—a 4.7% increase year-on-year; and the order book stood at £3.4 billion—higher than the prior year. Its full-year guidance of 17,000–17,800 completions remained unchanged. So why did the market punish it so harshly? The problem lies in profitability. Adjusted pre-tax profit fell 13.6% year-on-year to £199.9 million; operating margin narrowed from around 9% to 8%. On the surface, that’s just a one-percentage-point difference—but in construction, margins are the most direct measure of operational efficiency. A deeper issue is the lingering bill for building safety. In October 2024, Barratt Development completed its acquisition of Redrow for approximately £2.5 billion.

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European Shares Rise as British Homebuilders Surge on Buyer Support Scheme

European Shares Rise as British Homebuilders Surge on Buyer Support Scheme

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