GBP USD Exchange Rate Slides as UK House Prices Plummet

March 7, 2017 - Written by Toni Johnson

STORY LINK GBP USD Exchange Rate Slides as UK House Prices Plummet

The GBP USD exchange rate slumped to a new six-week low this morning as markets reacted poorly to the latest Halifax House Price figures.

Pound US Dollar (GBP USD) Tumbles as UK Housing Data Disappoints

The Pound US Dollar (GBP USD) exchange rate fell this morning following some disappointing housing data from the UK.

Data compiled by Halifax reports that House Prices unexpectedly fell from 0.1% to -0.9% in February, falling considerably short of expectations that prices would rise to 0.3% and hit a three-year low.

The report also suggests that price growth will remain weak over the year as it slows to be more in line with wage growth.

Halifax’s Martin Ellis said;

‘A sustained period of house price growth in excess of pay rises has made it increasingly difficult for many to purchase a home. This development, together with signs of reduced momentum in the jobs market and squeezed consumer spending power, is expected to curb house price growth during 2017.’

Analysts also attributed the decline to weakening consumer sentiment as rapidly rising inflation and uncertainty over Brexit leaves families reluctant to make major commitments such as purchasing a property.

US Dollar’s Advance Slowed by Rise in Trade Deficit

The US Dollar stalled this afternoon however following downbeat US Trade balance in which the US trade deficit rose to $48.5bn at the start of the year.

The US trade deficit is now at an almost five-year high as imports continue to far outstrip exports.

Investors will be keen to hear the response from Donald Trump after he spent much of his first few weeks in office trying to persuade the US to ‘buy American’ and has threatened to tear up a number of trade deals, which he blames for undermining the US economy.

However the drop is unlikely to negatively impact bets that the Federal Reserve will raise interest rates this month, meaning that the ‘Greenback’ should remain fairly resilient.

GBP USD Exchange Rate Forecast: Lord to Push for Second Amendment to Brexit Bill

The GBP USD exchange rate may look to rally later today as the House of Lords prepare to deliver the government’s Brexit bill its second defeat.

Peers are expected to call for an amendment that will ensure that parliament gets a ‘meaningful vote’ on the final terms of Brexit, something investors hope would force Theresa May to soften her approach to Brexit.

Sterling may also see a slight lift tomorrow afternoon as Chancellor Philip Hammond releases his latest budget statement, with economists expecting he may introduce measures to encourage Business investment after it plummeted at the end of 2016.

Meanwhile the US Dollar may stumble on Wednesday with the release of the latest employment change data, with new hiring’s forecast to slide from 246k to 190k in February.

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