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September 1st - Data from the National Association of Home Mortgage Borrowers (NAM) shows that UK house prices rose in August, indicating that housing demand remains resilient despite the economic impact of the ongoing conflict between the US and Iran. The average UK house price rose 0.2% in August to £275,465, reversing a revised 0.1% decline in the previous month. Augusts price performance was slightly better than economists expectations of a 0.1% increase. This data suggests that the UK housing market may be weathering the impact of the Middle East conflict. Ample household savings and Prime Minister Andy Burnhams cost-of-living measures are helping to maintain housing demand. However, energy costs remain high, and house prices have fallen in two of the past four months. Overall economic sentiment in the UK may deteriorate further. The Iranian energy shock has dampened market hopes for interest rate cuts, with traders now expecting the Bank of England to raise rates by 25 basis points by the end of the year. Meanwhile, speculation surrounding potential tax increases in the new Chancellor of the Exchequer John Healys first budget could further dampen the willingness of potential homebuyers.The UKs Nationwide house price index rose 0.2% month-on-month in August, below the expected 0.10% and the previous reading revised from 0.10% to -0.1%.The UKs Nationwide house price index rose 1.6% year-on-year in August, below the expected 2% and the previous reading revised from 1.80% to 1.4%.Germanys real retail sales fell 3.4% month-on-month in July, compared with an expected 0.4% and a previous reading of -0.7%.Germanys real retail sales fell 2.5% year-on-year in July, compared with a previous reading of -0.2%.

Despite the fact that Eurozone interest rates are anticipated to peak sooner, the EUR/GBP looks to have breached over 0.8630

Daniel Rogers

Dec 07, 2022 15:12

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The EUR/GBP pair has had a stronger recovery from 0.8580 during the Asian session, approaching the pivotal 0.8630 level. Despite the European Central Bank (ECB) being close to reaching an interest rate high, there has been strong demand for Euro bulls. Thus, the monetary policy meeting scheduled for next week will be of utmost significance.

 

The cross is attempting to break strongly above the significant barrier of 0.8630 for the fourth time this week. The hawkish remarks made by ECB policymakers are holding back the euro bulls.

 

"There will be another rate hike," said Constantinos Herodotou, governor of the Central Bank of Cyprus, "but we are very near to neutral." The European Central Bank's chief economist, Phillip Lane, is unsure as to whether the inflation peak has already occurred or will take place in 2019. He stated that although "much has already been done," he does not rule out more rate increases.

 

Investors are currently looking forward to Christine Lagarde's speech, which will be revealed on Thursday. The ECB President is likely to lower her inflation projection in her future statement in light of the poor retail sales numbers.

 

In contrast to expectations for a 1.7% loss, this week's Eurozone retail sales numbers showed a 1.8% decline. Aside from that, annual economic data contraction came in at 2.7% as opposed to the 2.6% consensus expectation. A decline in household demand demonstrates the effectiveness of the European Central Bank's (ECB) policy tightening initiatives. To reach their sales targets, firms could feel pressured to lower the prices of their products and services.

 

The United Kingdom's deteriorating food crisis, brought on by growing costs and a labor shortfall, has had an impact on the Pound Sterling. According to Minette Batters, president of the National Farmers Union, "the government and the entire supply chain must act swiftly." The Financial Times stated that "tomorrow might be too late." The economy already faces rising food inflation, and the issue with the supply of food will make matters worse.


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