Friday 18th April Trading
Trading on Friday saw Sterling continue to make gains against the EUR & USD following Thursday’s announcement of support to the UK’s mortgage market. Analysts at JPMorgan agreed that any fresh measures would struggle to offer long-term support to the pound. "With the U.K. economic outlook continuing to deteriorate and further rate cuts in the pipeline, fading support will continue to undermine sentiment towards sterling," said Kamal Sharma, a currencies strategist at the bank in London.
Review of the Weeks Trading
Sterling’s Revival… but is it Short Term?
In an up and down week for sterling we saw new record low’s on Wednesday followed by a strengthening Thursday in to Friday. This is the first time we’ve seen such gains in a considerable length of time. As mentioned above, the reason the rates improved is the announcement by the Bank of England that they plan to make available Billions of pounds in the biggest ever special initiative by the British monetary authorities to supply liquidity to the British banking system. (Banks are increasingly unwilling to lend to one another because of uncertainty over the exposure which they have to the US sub-prime mortgage market.)
The banks have been asking for longer term finance from the Bank of England to fill their funding gap.
However, over the last 9 months we’ve seen a downward trend and apart from last weeks news, there has been little positive data lately that suggests this decline will halt any time soon.
Further interest rate cuts will no doubt have an effect; analysts believe the Bank of England could be forced to make a further 4 or 5 cuts this year in an effort to spur the UK economy in the face of the looming global credit crunch, and also to try and boost the UK housing market.
With further data released this week concerns are that any negative UK data will see last weeks gains lost and a further decline in our ever weakening pound.
An article published in The Sunday Times states that a €200,000 property, has become more than £27500 more expensive in the last 8 months.
It’s only right to mention the forward contract at this stage; you can fix today’s exchange rates up to 2 years into the future and only pay a small deposit now. You can then take the initiative of this spike and secure your rate now, don’t let your dream property risk becoming more expensive than it already is.
The Week Ahead Data Reports
21st April 00:01 – (UK) The Rightmove House Price Index –It shows the strength of the UK housing market, which can be considered as the economy as a whole due to property prices' sensitivity to changes in the business cycle.
22nd April 15:00 – (US) Housing Price Index - It is an important indicator as the housing market is considered as a sensitive factor to the US economy.
23rd April 09:30 – (UK) Bank of England Minutes - The minutes of the BoE meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee.
24th April 09:30 – (UK) Retail Sales - Measures the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending.
For more information on how this data could affect things, call your dedicated dealer today.
And Finally ….
A businessman was offered the chance to buy London's Ritz Hotel for just £250m by a man claiming to represent its reclusive owners, a court has heard.
The man borrowed £1m to pay for sale documents, only to find the supposed vendor was an out of work lorry driver and the papers did not exist.
So if you’re looking for a sound investment with a genuine vendor why not try www.propertyline.co.uk a much safer place to find your dream home rather than in a trucker’s café.
If you have any questions regarding this report, or wish to discuss an upcoming requirement with an experienced broker that will talk on your level, please email me at djw@currencies.co.uk providing a telephone number and i will get in touch straight away.
Have a great day and thanks for reading!
Daniel Wright
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