Sterling has started the week on the front foot to continue its impressive rise since the beginning of February with yet more positive releases from the housing market.

Historically, growth in demand within the property market has often been used as an indicator to long term economic stability within the country in question and so the latest Rightmove report may go some way to provide further support to the pound. Despite the considerable political strain over the course of the last 12 months, the report posted a monthly pick up of 0.8% in average asking prices pulling levels close to an all-time high. Furthermore, the yearly figure of sales agreed jumped by an impressive 12.3%.

The release follows on from last week’s surprising note from the Royal Institution of Chartered Surveyors who confirmed that house prices are climbing at the fastest rate in nearly 3 years. Evidently the election result on the 12th of December has helped build confidence within the market and potentially going some way to bolster sterling’s value on the international stage.

On the political front, the government further cemented its plan to restrict the levels of “low skilled” foreign labour once the transition period comes to an end this year which has drawn a fair amount of interest from the markets.

Brexit Trade and G7 Summit

Brexit Comments Cause Volatility for the Pound

Whilst speaking at the Munich security conference over the weekend, French foreign minister Jean-Yves Le Drian stated UK and EU negotiators are getting ready to “rip each other up”.

With both sides posturing intensely ahead of talks, the questions around immigration may well be central to debates in the weeks and months ahead.

The UK government are in the process of pulling together a point-based system in a bid to layout the standards to be granted access to live and work in the UK from 2021 onwards, with qualifications and expected wages playing a role. This morning’s average earnings release then might be watched a little closer by the markets as a result.

EUR, US and China

Following a difficult run throughout last week’s trading, single currency holders will be hoping for some positivity to help reverse the trend. The start of this week however might not fill the markets with optimism, particularly following the rumours of yet another political crisis in Italy over the weekend.

Discord between Italia Viva Leader Matteo Renzi and Prime Minister Giuseppe Conte has been well documented in recent months and has sparked speculation that Conte might be trying to put together a new coalition.

The PM’s office has since denied these reports however it doesn’t seem to have bolstered market sentiment so far. It will be interesting to see if this story escalates any more in the weeks and months ahead.

Looking at slightly more short-term prospect, this morning’s ZEW survey, measuring business confidence within the block could be worth monitoring.

Coronavirus’ effect on World Economies

We saw a particularly fragile side to the Eurozone’s economy throughout 2019 as the trade war between the US and China dragged on. Now with the Coronavirus threatening to deeply impact the Eurozone’s manufacturing industry it will be interesting to see how concerned European market leaders are.

There was a breakthrough during yesterday’s trading as China accepted applications for a fresh line of tariff exemptions for 696 agricultural and energy products. The move marks the most sizeable exemption accepted by China since the face of between the US and China began and may prove pivotal in sparking investor confidence in global markets once more. Could we see a switch in trend for the riskier commodity-based currencies as a result?


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