Having started the week sluggishly, the pound woke from its slumber following the release of the Halifax House Price Index yesterday morning. According to the mortgage lender, annual house price inflation is now at its strongest level in nearly seven years, with the average UK property price reaching £261,743 – a record high. On an annual basis, house prices surged by 9.5%, on a quarterly basis they ticked up 2.4%, and month-on-month they increased by 1.3%.
Halifax managing director Russell Galley said: “Heading into the traditionally busy summer period, market activity continues to be boosted by the government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, after which there will be a phased return to full rates. For some homebuyers, lockdown restrictions have also resulted in an unexpected build-up of savings, which can now be deployed to fund bigger deposits for bigger properties, potentially pushing property prices even higher.”
UK retail sales rose 23.7% on a like-for-like basis in May from 12 months earlier, when they decreased 3% from the preceding year, the British Retail Consortium (BRC)/KPMG Retail Sales Monitor showed yesterday. Online sales play a huge role in the reading according to the BRC and have increased the growth rate significantly during the pandemic.
The dollar dipped slightly yesterday as Treasury yields waned and investors focused on key inflation data later this week, following Friday’s softer-than-expected US employment report. The influential Nonfarm Payrolls report showed recent job growth – which fell short of expectations – was not strong enough to raise expectations that the Federal Reserve will tighten its monetary policy any sooner. Investors are already looking ahead to next week’s meeting of the central bank’s monetary policymakers – all of which combined to apply pressure on the dollar.
Follow Friday’s benign jobs report, Treasury Secretary Janet Yellen said President Joe Biden should proceed with his $4 trillion spending plans even if they spark inflation that continues into next year and higher interest rates.
By this morning, the pound vs dollar rate was in the 1.41 mid-range.
A dearth of data in the UK’s economic calendar today means tomorrow’s Royal Institution of Chartered Surveyors Housing Price Balance Survey for May is the next release of note.
Today’s Goods and Services Trade Balance figure for April is the first significant release from the US economy this week. Investor attention will then turn to the Consumer Price Index for May, which is released on Thursday – a key indicator to measure inflation and changes in purchasing trends.
The post Pound to Dollar Rate Recovers After Initial Slip Lower appeared first on Pound Sterling Forecast.
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