Friday, July 31, 2009

Rentier nation

Sterling jumps as UK house prices rise for third month in a row

The article is subtitled "Sterling jumped more than a cent against the dollar and also strengthened against the euro after house prices in Britain rose for a third month in a row." So what's going on here? A naive reading of this article is that rising house prices strengthens our currency!?

Posted by quiet guy @ 02:17 AM (425 views)
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4 thoughts on “Rentier nation

  • little professor says:

    Rising house prices = economic recovery and less risk of deflation = more chance of interest rate rises = stronger currency

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  • britishblue says:

    You also have to remember just how far sterling had fallen. It went down from 1.70 to 1.02 to the Euro, 2.1 to 1.35 to the dollar, 2.4 to 1.52 against the Swiss france etc, At the turn of the year the UK was viewed as the worst major economy in Europe. Whilst the UK may be dire, apparently good news has come out of the UK whereas worse news has come out of some of the European economies, so international speculators have been eyeing the pound up as looking cheap. Also, around the world the lbour government and especially Gordon Brown is looked upon a little more favourably than he is at home.

    You cannot ignore indices like the Nationwide, that now show 3 monthly rises if you are an international speculator. They are not experts on UK house prices, they will just look at this as another factor in their buying/ selling judgement.

    I have been surprised about the recent rise in house prices, even given the bious in the amount of stock that has been sold. But everything I read about bubbles, suggest this is quite normal in the bursting of a bubble.

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  • It was just a day when bank traders decided to buy rather than sell. Oil went back up, erasing the 5% drop on Wednesday, and stock markets also went up.

    It doesn’t mean anything. Trying to ascribe meaning to what stockbrokers do is pointless. I just wish we could rein them in so they stop hurting everyone else!

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  • This barely registered in the Sterling Price of Gold at Bullion Vault yesterday. It just continued it’s ever so slow decline.

    Moneyweek suggested that Gold caould fall to £520-£560/oz over the next few weeks and this could represent a buying opportunity.
    There basis for this was analysing long and short positions held as opposed to sterlings strength.

    However this is the second article in as many days that could point to Gold moving a bit lower.

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