Currency Note

Sterling at a low while UK house prices surprise markets

By Sharyh Murray-Francis September 1st, 2022

The pound makes a slight recovery against the euro this morning but is still at a low overall. This follows growing fears over the global economy in addition to UK house prices rising above market expectations in this morning’s data release. Against the dollar, sterling continues to weaken.

Nationwide housing prices YoY were announced this morning revealing the UK ‘s house price index has risen to 10%, much higher than markets were anticipating – figures were expected to rise to 9.4%. Nationwide’s chief economist says they are expecting the market to “continue to slow” amidst increasing “pressure on household budgets”.

In the eurozone, inflation is at a record high of 9.1%, fueling fears of a further rate hike by the European Central Bank.

Unemployment is also predicted to make a gentle rise. Markets are predicting euro area unemployment to increase to 6.7 today after remaining at a low of 6.6 for 2 consecutive months – data will be released later this morning.

Lots of interesting data from the US today, including initial Jobless claims, S&P global manufacturing PMI and ISM manufacturing PMI.

This evening, Federal Reserve president, Raphael Bostic will speak on inflation. In the last meeting, the Fed’s Chair Jerome Powell said that “another unusually large increase could be appropriate at next meeting” however that would depend on more data.

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GBP: sterling gains strength against euro but still at a low

Yesterday the pound continued to sink against the euro, reaching a low of 1.15 at 15:40pm following fears over the global economy. Today, the pound makes a slight recovery from where it fell yesterday but is still at a low against the euro. This follows the latest housing prices YoY data. Against the dollar, sterling has weakened.

Nationwide housing prices for Aug YoY were announced this morning revealing the UK house price index has risen to 10%, above market expectations of 9.4% .Nationwide’s Chief economist said they “continue to expect the market to slow” following increasing “pressure on household budgets” in the coming quarters and with inflation set to “reach double digits” towards the end of 2022.

GBP/USD over the past year

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EUR: euro falls amidst soaring inflation and global gas fears

Today the euro is weaker against both sterling and the dollar following the latest inflation data and eurozone gas supply restrictions.

Yesterday the eurozone inflation rate broke records soaring to a new high of 9.1%, fueling fears of a further rate hike by European Central Bank.

Unemployment is predicted to make a gentle rise. Markets are predicting euro area unemployment to increase to 6.7 today, after remaining at a low of 6.6 for 2 consecutive months. Data will be released later this morning.

Italy’s unemployment rate is also expected to increase from 8.1% to 8.2%.

USD: dollar strengthens against both currencies

This morning the dollar has strengthened against sterling. It has also strengthened against the euro, amidst eurozone gas restrictions.

Lots of interesting data from the US today, including initial Jobless claims, nonfarm productivity QoQ, S&P global manufacturing PMI and ISM manufacturing PMI. The latest PMI figures beat market expectations of 52, with a reading of 52.8. Today, markets are expecting PMI to make a gentle fall to 52.

This evening, president of the Federal Reserve, Raphael Bostic will speak on inflation. In the last meeting, the Fed’s Chair Jerome Powell said that “another unusually large increase could be appropriate at next meeting” however that would depend on more data.

Further developments in ex-president, Donald Trump’s trial reveal the government has filed its 36-page opposition to his demand for a special master be appointed (a request for an independent mediator examine the documents).

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