Pound pummelled - UK housing market to mirror US?
Dailyfx.com:
After a surprisingly sharp drop in housing prices from the HBOS indicator, GBPUSD proceeded to drop 250 points through the course of the day, slipping below major support seen around 1.9750 in the process.
According to the data, housing inflation tumbled 2.5 percent through March, the sharpest monthly contraction since the UK’s last recession in 1992. What’s more, the 1.0 percent drop in prices through the first quarter from the same period a year before marks the worst pace the indicator in 12 years. This is a fully loaded piece of data.
For the market, this data boosts speculation of a rate cut from the Bank of England on Thursday - with a number of traders entertaining the possibility that the MPC will cut by 50 basis points (though we see this as a very low likelihood).
For the long-term, fundamental outlook, this data adds another facet to the concern that the UK housing market is looking a lot like its US counterpart a few years back. Looking ahead to the next 24 hours, we will monitor the Nationwide Consumer Confidence and industrial production numbers to see whether the data can add to rate speculation and maintain the pound’s recent volatility.
After a surprisingly sharp drop in housing prices from the HBOS indicator, GBPUSD proceeded to drop 250 points through the course of the day, slipping below major support seen around 1.9750 in the process.
According to the data, housing inflation tumbled 2.5 percent through March, the sharpest monthly contraction since the UK’s last recession in 1992. What’s more, the 1.0 percent drop in prices through the first quarter from the same period a year before marks the worst pace the indicator in 12 years. This is a fully loaded piece of data.
For the market, this data boosts speculation of a rate cut from the Bank of England on Thursday - with a number of traders entertaining the possibility that the MPC will cut by 50 basis points (though we see this as a very low likelihood).
For the long-term, fundamental outlook, this data adds another facet to the concern that the UK housing market is looking a lot like its US counterpart a few years back. Looking ahead to the next 24 hours, we will monitor the Nationwide Consumer Confidence and industrial production numbers to see whether the data can add to rate speculation and maintain the pound’s recent volatility.
