Latest News

Sterling weakens after soft housing data


Sterling weakens after soft housing data By

Breaking News


Peter NurseForex

Published Aug 01, 2023 08:50

© Reuters. – The U.S. dollar edged higher in early European trade Tuesday, while sterling fell as U.K. house prices slumped sharply as rising interest rates weighed.

At 03:20 ET (07:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher at 101.865, after hitting a fresh three-week high of 102.07 the previous session.

Dollar helped by tighter credit conditions

The safe-haven dollar received a boost on Monday after a survey from the Federal Reserve showed U.S. banks reported tighter credit standards and weaker loan demand during the second quarter.

This news suggested that the rising interest rates were having an impact on the U.S. economy, hitting risk sentiment.

The greenback fell around 1% last month, its second straight losing month, on expectations that the U.S. central bank could shortly end its aggressive year-long tightening cycle.

Fed Chair Jerome Powell was at pains to point out the importance of upcoming economic data in the decision-making process, and thus focus is well and truly on Friday’s June jobs report for June, which is expected to confirm a healthy labor market.

Sterling falls as U.K. house prices drop by most since 2009

GBP/USD fell 0.1% to 1.2828 after data showed British house prices fell by the most since 2009 in the 12 months to July, with mortgage lender Nationwide stating the average house price was down 3.8% after a 3.5% annual fall in June, with a fall of 0.2% month-on-month.

This follows data from the British Retail Consortium, released Monday, showing that prices in U.K. stores fell for the first time in two years.

These data points suggest that rising interest rates are having an impact on the British economy, slowing the highest inflation in the developed world, and could pressure the Bank of England to ease its tightening cycle.

That said, the BoE is widely expected to hike interest rates once more on Thursday, for what would be the 14th consecutive time.

EUR/USD fell 0.2% to 1.0972 after Spanish manufacturing PMI dropped to 47.8 in July, falling from 48.0 the prior month and indicative of the difficult conditions the eurozone’s manufacturing base is struggling with.

Aussie slumps after RBA stands pat

AUD/USD fell 1% to 0.6652, with the Australian dollar falling sharply after the Reserve Bank of Australia kept key interest rates unchanged at 4.1%, disappointing those who had expected for a 25-basis-point hike with inflation still well above the bank’s target range.

The RBA flagged the potential for more rate hikes in the coming months, but given the slump in the Aussie dollar this will come later than many had expected.

USD/JPY rose 0.3% to 142.69, with the Japanese yen continuing to retreat, down to a 3-week low, in the wake of the Bank of Japan’s policy meeting last week at which the central bank shifted its yield curve control policy.

Sterling weakens after soft housing data

Related Articles

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2023 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Businesses’ Inflation Expectations at 11-month Low

Previous article

UK factory output falls at fastest pace in seven months, cost pressures ease -PMI

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News