Forex regulation and housebuilding top UK agenda

Traders who manipulate markets are facing longer sentences, U.K. Chancellor of the Exchequer George Osborne will warn in an important speech Thursday.

He is also expected to announce plans to stimulate housebuilding, to deal with coruscating house prices in London and the South East. On Thursday morning, the RICS house price survey, which suggested a further pick up in prices in May, added to the sense of urgency around this issue.

Oli Scarff | Getty Images News | Getty Images

Record low interest rates, a better than expected economic recovery and an influx of foreign buyers seeking safe havens have pushed up house prices in London in particular, raising fears of a house price bubble.

Osborne's speech, on Thursday evening at 1900 BST, will be followed by an address by Bank of England Governor Mark Carney. The Mansion House speech, to business leaders in the U.K., is traditionally an attempt to set the agenda for business and the economy by the Chancellor.

The speeches are the "key event risk for the pound this week", according to analysts at Citi.

UK's Osborne says must be alert to housing debt

The U.K. is also likely to defy broader European Union rules over market manipulation, in the latest in a series of attempts by Osborne and Prime Minister David Cameron to demonstrate their independence from the EU. The U.K Treasury, the BoE and regulator the Financial Conduct Authority are expected to come up with a series of proposals targeting the bonds and commodities markets as well as foreign exchange.

London has been at the center of global scandals over artificial manipulation of interest rates and foreign exchange rates.

The U.K.'s central bank suspended an employee earlier this year, after allegations that foreign exchange traders had been told at a meeting with Bank officials that sharing information on customer orders was allowed.

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