Britain’s Pound Gains Ground Amid Hot Housing Data
Today the pound is doing a solid wobble, hovering near the ¹³¹₈₂ level against the U.S. dollar. The euro, however, keeps holding down its gains, slipping roughly 0.06% over the past three days.
Housing Market Sizzles, Boosting Market Confidence
- Halifax’s House Price Index leapt with a 4.3% year‑on‑year increase— the fastest pace since November 2022.
- Monthly growth? A steady 0.3%, beating market expectations.
- The stunning surge gives the Bank of England a stronger footing to advocate a measured approach when trimming rates.
Construction’s Respite
August’s construction PMI showed a tiny slowdown, but the sector is still enjoying a sustainable recovery. New orders and residential activity set the fastest pace since September 2022, with tighter economic conditions and political steadiness that’s lifting customer sentiment.
Dollar’s Downtrend Continues
The U.S. dollar keeps softening this week following weaker-than‑anticipated labor statistics. The market is leaning toward multiple rate cuts this year, while the Bank of England is expected to lag behind its advanced‑economy peers.
Fed’s Upcoming Moves
- December’s meeting could see a cut of up to 1.25 percentage points (35% chance).
- There’s a 41% chance of a 0.5‑basis‑point cut in the next two weeks.
- In total, a 25‑basis‑point cut remains the most probable scenario at 59%.
Conversely, no rate cuts are predicted for this month by the Bank of England.
Bonds: Gap Narrowing, Pound Gains
The yield spread between the UK and U.S. 10‑year bonds is tightening, now –0.211—a low since September 2023. If U.S. labour data underperforms, the spread could widen in favour of UK bonds, giving the pound a further lift.
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