GBP dropped off against both the pound and dollar yesterday following disappointing data relating to house prices in the UK. Nationwide data showed that house prices were up 0.1% in July which was less than the 0.5% that was anticipated. This could mean that the red hot housing market is now cooling down a bit which, if so, means there most likely won’t be an interest rate hike this year would will depreciate the pound. We also saw a comment emerge from the mouth of Ben Broadbent that GBP might be overvalued by as much as 10% - this is similar sentiment to what we saw the IMF mention earlier in the week. If this is the case, one industry that will surely suffer is exports which will certainly hamper the UK’s economic recovery.
EUR got off to a decent start with some gains against the pound, although it did end slightly down against the dollar. Positive economic figures from Germany for July showed the unemployment dropped for the first time on 3 months which gave EUR a boost in the morning’s trading, along with better than expected retail figures for June. Unemployment for the Eurozone as a whole was also down – falling to 11.5% - which bodes well for Europe’s prospects in rectifying its issues.
Of the three majors, USD performed the best yesterday despite the fact that figures out for the dollar weren’t so great. PMI data for Chicago came in at 52.6 rather than the anticipated 63.0 – the biggest fall since 2008. There was also a slight jump in the number of those jobless (from 301K to 302K) following redundancies in July, many of which were at Microsoft. We will see manufacturing, non-farm payrolls and personal expenditure data out today in the US.
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