Yesterday morning the office for statistics released their latest House Price Growth numbers, which fell to a 6 year low. Average house prices across the UK grew by 0.6%, however properties in London fell by 3.8%. Brexit is being labelled the main reason for the fall in London as international and domestic investment is slowing, and as the banks are taking on less riskier mortgages, this is also a contributory factor.

Currency Pair% Change (Month)Difference on £200,000
GBPEUR1.99%€4,400
GBPUSD2.84%$7,120
GBPAUD2.96%AUD $10,420

Inflation was also released yesterday and remained at 1.9%. The ONS exclaimed “Inflation is stable, with motor fuel prices rising between February and March this year, offset by falls in food prices as well as the cost of computer games growing more slowly than it did at this time last year”. Now that inflation has remained at 1.9%, house prices are at a 6 year low and Brexit remains a major concern, I expect the Bank of England to give no forward guidance this month of when they may hike interest rates and may even be fairly dovish at the interest rate decision next month which could have a negative impact on sterling.

Currency markets uncertain of Brexit developments

What next for Brexit?

Now that the UK have an extension until 31st October, UK Prime Minister Theresa May will continue the negotiations with the leader of the opposition, Jeremy Corbyn. If the two leading parties manage to come to a compromise, the agreed deal will be voted on by MPs in the coming weeks. However if the two parties fail to come to a compromise, MPs will once more vote again on a range of different options.

If MPs fail to reach a majority by the 23rd May, then the UK will have no choice but to take part in European elections. At that point we will know that the negotiations have failed with Labour and MPs couldn’t find common ground, therefore I expect that the Prime Minister would have to act.

I believe her options are as follows: resign and a new Prime Minister starts from scratch, hold another referendum, call a general election or crash out with no deal. All of the above could put pressure on the pound due to the uncertainty it would create. 

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