GBP slips on poor house price data
The Royal Institution of Chartered Surveyors (RICS) runs a survey each month where they ask surveyors (estate agents) whether they are seeing house price increases or declines in their area. They extrapolate that into the House Price Balance as a percentage. This month’s survey was published just after midnight and it delivered a minus 53% result. That’s the biggest drop in house price confidence since 2009. No surprise then that the pound took a bit of a knock overnight. The drops aren’t dramatic but the GBP/USD rate is down half a cent to $1.2730 and the GBP/EUR rate gave up all of yesterday’s gains and more. So, GBP/EUR is back below €1.16 again. It sits at €1.1575 this morning. We get the European Central Bank’s economic bulletin this morning but very little else on this side of the Atlantic. As such, sterling is likely to tread water because tomorrow brings a raft of UK data including gross domestic product figures.
US inflation takes centre stage
At a time when the US Federal Reserve is on the precipice of halting its interest rate rises, the Consumer Price Index takes a position of huge significance. We will get that data this afternoon. The market expectation is that we will see inflation rise slightly to a level of 3.3% in the year to July. If so, it will strengthen the hand of the Hawks within the Fed who are seeking tighter military policy for an extended period. A reading above 3.3%, especially if core inflation rises as well, will strengthen the US dollar. Whether that’s either a delight or a concern depends on your position but being forewarned is always good. The juxtaposition of that data with today’s release of the weekly jobless claims is an interesting one. If inflation is picking up at the same time as unemployment is rising, the Fed’s dilemma will be writ large.
GBP/NZD slips below 2.10 and PMI may push it lower
As mentioned above, sterling slipped a little after the RICS house price balance and that bought the GBP/NZD rate back below NZD 2.10. But is no great surprise when you consider this pair hadn’t been to that level since April 2016. So GBP/NZD start the day at 2.0975 and could well head lower later this evening when New Zealand publishes The Business NZ Purchasing Managers’ Index (PMI) for the manufacturing sector. This index hasn’t produced a reading above 50 (the divide between confidence and pessimism) since March and we aren’t expecting anything like that in this result but the markets are expecting an improvement to just below 50 and that would be enough to produce New Zealand dollar buyers. So don’t be surprised if we find the GBP/NZD rate at lower levels by the time the UK opens tomorrow.