Sterling exchange rates have taken a downfall despite relatively positive economic data. Is Brexit beginning to weigh in on investment?

Softer housing data puts pressure on the Pound

The Royal Institute of Chartered Surveyors (RICS) has reported that the UK housing market has “settled down” after the Brexit vote to leave the EU and that a shortage of homes was helping support prices. The index jumped higher although it still remained one of the lowest readings in the last year and a half. Halifax house price data from Wednesday however pointed to a fall in prices of -0.2% for the month of August but also reported a softening in sales activity putting pressure on the pound at the end of this week.

This housing data is important especially whilst the markets are looking for clues to assess any damage from the Brexit vote. House prices do represent confidence in the economy and in times of uncertainty the property market as well as construction are normally one of the first areas to fall.

Brexit uncertainty continues to weigh on Sterling

European Council president Donald Tusk was at Downing Street yesterday to meet with Prime Minister Theresa May to discuss the next steps for Brexit. He stated “it is in everyone’s interest” for Brexit to start as early as soon as possible and that the ball is now in the UK’s court. Theresa May made clear earlier this week that the government would not show its hand with regards Brexit negotiations. Clearly the uncertainty surrounding Brexit for all parties remains with new twists and turns each day. There has never been a more important time to be in contact with your account manager to keep you abreast of what is happening in the markets and how these developments directly impact on exchange rates.

Not only are the markets juggling with the implications of Brexit but so too are the Oxford English Dictionary (OED) with its meaning. The OED is in the process of selecting the definition of Brexit which is reported to be imminent and which will appropriately sit somewhere between brew and brie.

Consumer Inflation Expectations produced by the Bank of England are released this morning and show how prices are expected to change in the next year. A strong figure here is likely to put pressure on the Bank of England and would see the pound rally on the expectation interest rates in the UK will still have to rise in the future.

Unemployment data is released next Wednesday. Last month’s post Brexit data saw unemployment hold steady at 4.9% although there was an improvement in those individuals claiming unemployment benefit. There will be a huge amount of interest in this “hard data” and any deterioration in these numbers would almost certainly signal a slide for the pound.

As we move closer to Article 50, Sterling could find itself under significant pressure. Now could be a good time to consider making a currency transfer. Call us today on 01494 725 353.


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