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A fresh new day for UK housing?
The pound gained a little against the euro and lost a little against the US dollar yesterday, as the quiet period for sterling continued.
There were bigger losses against the Japanese yen (with sterling down 0.75% yesterday, although it has picked up again today), but as one analyst pointed out yesterday, sterling’s volatility is close to a 30-year low.
Fortunately for those holding pounds, sterling’s lack of movement has been at a relatively strong level: 3% up on the euro compared to last March and 5% up on the US dollar.
Reasons for the lack of movement include a period of political stability and a ‘slack tide’ in interest rates across all the major economies, with no movement up or down in sight for another month or two at least.
The lack of high-level data has also been a factor. Yesterday car production numbers came in for the UK at a 21% year-on-year rise. However, there were warnings about the potential impact going forward of attacks on shipping in the Red Sea.
Mortgage approvals hit their highest level since the mini-Budget of late 2022, while the Bank of England pointed out that the ‘effective’ interest rate on new mortgages fell to 5.19% in January, a drop of 9 basis points. Following on from this, today we have heard from the Nationwide that house prices are on the rise again, after a year of falls. The building society said that prices were up 1.2% in the year to February but remain 3% below the all-time high set in summer 2022.
Speaking of the Bank of England, a new deputy governor has been announced, with Clare Lombardelli replacing Ben Broadbent. She will be moving over from the OECD but before that was at the UK Treasury and had worked at 10 Downing Street for David Cameron.
On the European side of the equation there was no shortage of data yesterday, with inflation falling to 2.9% in France, 2.8% in Spain and 2.5% in Germany. Later this morning we will get the overall rate in the eurozone, with 2.8% expected.
Next week the data takes a while to get going, but there is an interest rate decision from the European Central Bank on Thursday, albeit with no change expected.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 3918 7255 to get started.
GBP: Sterling holds steady
Sterling recorded another quiet day yesterday, with little on the wires to disturb the markets. This morning’s house price data looks positive, but is already being undercut by mortgage rates starting to be raised again, in the absence of any signs from the BoE that rate cuts are on the way.
GBP/USD past year
EUR: Inflation falls continue
The single currency weakened yesterday as inflation was seen to be falling in three of the eurozone’s largest economies. Will that continue across the eurozone as a whole? We will see at 10am.
Next week starts slowly for data and doesn’t really gear up until the interest rate decision on Thursday.
EUR/USD past year
USD: Monetary policymakers take to airwaves
The dollar had a broadly positive day yesterday, gaining close a third of a percent against the euro and pound.
Whatever the collective noun is for Federal Reserve policymakers, there will be several of them speaking today. The minutes of the last FOMC suggested a marked reluctance to take the foot off the brake too early, but what will they be saying today?
Next week will be all about the labour market, with JOLTs Job Openings and Non-Farm Payrolls.
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USD/GBP past year
