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Sterling Falls On House Price Data-- Hpi And Pound Are Tied

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http://www.bloomberg.com/news/2010-06-28/pound-falls-from-seven-week-high-versus-dollar-after-home-price-gains-slow.html

Sterling will resume declining against the dollar as fiscal retrenchment in Europe and the U.K. slows growth relative to the U.S., according to Bank of Tokyo-Mitsubishi UFJ.
“We would agree with the U.S. stance and find it difficult to fathom the idea of rushing through fiscal consolidation measures to appease ratings agencies that played a key role in orchestrating the onset of the entire financial crisis,” Derek Halpenny, European head of global currency research, wrote in a report today. “This policy divergence is likely to mean that both the euro and the pound will resume their descent against the U.S. dollar over the coming months.”
Sterling slipped earlier today after a report showed house prices rose the least in five months in June.
The average home price in England and Wales gained 0.1 percent from May to 158,900 pounds ($237,317), London-based property researcher Hometrack Ltd. said. A separate report from Savills Plc said second-quarter luxury-home prices in central London, defined as properties worth more than 1 million pounds, rose by the smallest amount in five quarters.
‘Fiscal Tightening’
Gains by the U.K. pound may be limited as investors bet the government’s budget cuts will hinder the economic recovery, Goldman Sachs Group Inc. said.
“At some stage the impact of fiscal tightening on growth will become visible and at that stage, weaker demand could translate into weaker sterling again,” analysts including Thomas Stolper in London wrote in an e-mailed report received today.

I am not sure what planet traders are on to be bidding up sterling when we are on the precipice of joining the rest of the world in the great HPC. When our houses start really dropping hard sterling will go down with them--it is now our main industry, non-productive at that, courtesy of Brown who took a national hobby and made it into our biggest industry.

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http://www.bloomberg.com/news/2010-06-28/pound-falls-from-seven-week-high-versus-dollar-after-home-price-gains-slow.html

Sterling will resume declining against the dollar as fiscal retrenchment in Europe and the U.K. slows growth relative to the U.S., according to Bank of Tokyo-Mitsubishi UFJ.
“We would agree with the U.S. stance and find it difficult to fathom the idea of rushing through fiscal consolidation measures to appease ratings agencies that played a key role in orchestrating the onset of the entire financial crisis,” Derek Halpenny, European head of global currency research, wrote in a report today. “This policy divergence is likely to mean that both the euro and the pound will resume their descent against the U.S. dollar over the coming months.”
Sterling slipped earlier today after a report showed house prices rose the least in five months in June.
The average home price in England and Wales gained 0.1 percent from May to 158,900 pounds ($237,317), London-based property researcher Hometrack Ltd. said. A separate report from Savills Plc said second-quarter luxury-home prices in central London, defined as properties worth more than 1 million pounds, rose by the smallest amount in five quarters.
‘Fiscal Tightening’
Gains by the U.K. pound may be limited as investors bet the government’s budget cuts will hinder the economic recovery, Goldman Sachs Group Inc. said.
“At some stage the impact of fiscal tightening on growth will become visible and at that stage, weaker demand could translate into weaker sterling again,” analysts including Thomas Stolper in London wrote in an e-mailed report received today.

I am not sure what planet traders are on to be bidding up sterling when we are on the precipice of joining the rest of the world in the great HPC. When our houses start really dropping hard sterling will go down with them--it is now our main industry, non-productive at that, courtesy of Brown who took a national hobby and made it into our biggest industry.

Well, the £ is up against $USD today and about $1.51. But still, I very much agree with the likelihood that USD will go much higher against Sterling in the second half of this year maybe you'll see $1.38. It will be even more apparent when we get a defined moment of economic turbulence that I expect in the coming months. Any fallout from shares will push the USD higher for the nearterm.

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The pound was up today across the board including a rise of more than 1 % against the Euro to a new 12 month high. Those house price statistics can't have been that important.

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Somehow I just knew that when I saw this thread title this morning that sterling was going to be rocketing along against my chosen currency. Ho Hum.

Edited by Alan B'Stard MP

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Surely the key message here is:

We would agree with the U.S. stance and find it difficult to fathom the idea of rushing through fiscal consolidation measures to appease ratings agencies that played a key role in orchestrating the onset of the entire financial crisis

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The pound was up today across the board including a rise of more than 1 % against the Euro to a new 12 month high. Those house price statistics can't have been that important.

Pound up 3% against the dollar over the month

Pound up 1% against the dollar over the week

Pound up 0.5% against the dollar over the day

I'm not entirely sure what's driving it.. presumably the austerity measures make us look like a fiat safe haven... maybe :unsure:

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Pound up 3% against the dollar over the month

Pound up 1% against the dollar over the week

Pound up 0.5% against the dollar over the day

I'm not entirely sure what's driving it.. presumably the austerity measures make us look like a fiat safe haven... maybe :unsure:

A number of things I think:

- austerity measures now mean the markets think we'll probably pay back our debts

- some reasonable number of speculative positions are being unwound as a result of the above

- there will be demand for GBP from foreign investors wanting to buy UK government debt now that net issuance is going to rise (QE meant that net issuance was close to 0 for the last year)

- without a pile of inflation, GBP is currently somewhat undervalued on the basis of purchasing power parity

- the pound is seen as a known quantity vs. the Euro where just about anything could happen over the next year or so.,

That's my take anyway, which will probably be wrong.

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A few weeks ago BNP Parisbas were noting contra sterling in relation to the euro, remember anyone?

http://uk.finance.yahoo.com/q/bc?s=EURGBP=X&t=3m

Fitch has just downgraded BNP.

So now it's Mitsubish-Nippon re sterling/the dollar,

http://finance.yahoo.com/q/bc?s=GBPUSD=X+Basic+Chart&t=3m

...... yawn ......

And anyway, even if the tone of the note is shrill, the fundamental point is probably valid albeit hardly a big deal for sterling.

Does anyone know why editors give bank notes column inches? They're 10 a penny.

Edited by indirectapproach

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We & the Fed are in bed together..buy each others debt...............don't expect much in the way of falls this year.

Now its amlost 30 years ago the riots started, i was at the Toxeth riot....it will be harder this time because BTL have spread the "trouble" but once BTL crashes & they get thrown BACK into sub standard (by todays standards)..............then perhaps.

Might get a "Poll Tax" which will result in panic & a shed full of "QE"............Then it might happen.

Cheers

Mike

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  • 142 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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