GBP recovery knocked by RICS survey

As we suspected, sterling did mount a recovery of sorts yesterday but it has taken a knock again overnight after the release of the worst house price balance survey from the Royal Institution of Chartered Surveyors since 2009. This index has been trending lower since May 2022 and fell into negative territory in November last year. In essence, the minus 68% figure denotes the balance between surveyors who expect house prices to rise against those who are expecting a fall. It constitutes yet another reason for the Bank of England to take a long hard look in the mirror before they decide to tighten the money supply again. It is the softening of interest rate hike expectations that causes investors and traders to sell the pound. Although the pound is slightly stronger than it was this time yesterday, the GBP/USD rate is marginally below $1.25 and the GBP/EUR rate is hovering around €1.1625.

ECB ‘on hold’ decision expected

The European Central Bank will conclude its deliberations at lunchtime today and the markets are expecting but they will leave the base rate alone at 4.25%. Recent eurozone data has not been conducive to tighter monetary policy and that was highlighted this week by very poor German manufacturing data. The GBP/EUR rate, as mentioned above, is fairly level around €1.1625 and the EUR/USD rate is finding it hard to make any gains above $1.0750. It is just below that level this morning and we have initial jobless claims and retail sales data from the US this afternoon to keep traders on their toes.

AUD strength continues with strong jobs data

The Australian economy added 64,900 jobs in August, maintaining the unemployment level at 3.7%. Historically, that is marginally above the lowest level we have ever seen in Australia and all of the historic lows have occurred since August 2022. The GBP/AUD rate, which has been trending lower since the spikes at the end of August, is down to AUD 1.9415 this morning and there is no particular reason to suspect this downward trend will reverse anytime soon. However, there may be a correction overnight in reaction to Chinese employment and industrial production numbers, all of which have been rather unpredictable of late.