UK House Prices Rise

According to figures from the Nationwide building society the average UK house price increased by 0.3% in June stating that the Government’s Funding For Lending Scheme made a positive contribution. The scheme is designed to provide money to banks which they are then obliged to lend to on to SME’s and individuals at low interest rates in order to increase the flow of money through the economy and help boost both small businesses and also the housing market. With news that house prices are up it does indicate that the scheme is working and the housing market is starting to become more positive. In the UK people have a lot of money tied up in bricks and mortar and so when house prices are rising it can have a positive impact on the economy and therefore Sterling as it means house sales are likely to rise as people are more inclined to sell and when more houses are selling it means there is more money moving through the economy which is what is badly needed to help the UK economy grow. Should we continue to see strong housing market data we could see Sterling exchange rates improve and have a better outlook for the UK economy.

US Explain Tapering of QE

Following a huge amount of talk and some excitement in the market following Ben Bernanke, Chairman of the FED, comments that the US Central Bank will taper down their Quantitative Easing (QE) programme they have now confirmed that this tapering will not happen until the US economy strengthens. Bernanke’s comments led many to believe that the tapering was already inked into the FED’s diary later in this year and that meant the money that was continually being pumped into the economy was soon to dry up which could have a detrimental impact on the US. However, the fact the FED have now confirmed it is not a definite is purely to calm the markets and try to reduce the massive movement we have seen recently on the USD, it will be interesting to see what happens today on the markets following these comments.

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