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Best US Housing Data Since Credit Crunch Sends Pound Dollar Exchange Rate Lower

September 25, 2013 - Written by John Cameron

The strongest US housing data set in over seven years has further fuelled the Buck’s post-Fed announcement recovery. Today’s US Durable Goods Order number will provide further direction for Cable.

The Pound US Dollar exchange rate (GBP/USD) is currently trading down by 0.25% at 1.6002 GBP/USD. The US Dollar Pound exchange rate is currently trading at 0.6249 USD/GBP.

In a relatively unremarkable session in the currency markets yesterday, one data release stood out. The latest S&P Case-Schiller Home Price Index revealed that US property prices climbed by a dizzying 12.4% during the year leading up to the end of July. The showing represented the largest annualised increase in American house prices since Q1 2006 in the golden days prior to the monumental sub prime mortgage-driven credit crisis which broke in the States in 2007. The global economic landscape has not been the same since.

Many analysts suggest that the world economy will not therefore have healed until the US property sector shows signs of improvement – yesterday’s highly encouraging data shows that America’s housing sector is on the up and up. The US Dollar registered a slight gain against Sterling on the day, sending GBP USD down into the mid-1.5900s at one point. The forward move for the Greenback would surely have been of a greater magnitude were it not for the fact that market participants are becoming increasing unconvinced that a cut in Quantitative Easing will be forthcoming from the US Federal Reserve before the year end.

Looking ahead, this afternoon’s US Durable Goods Orders figure for August will offer the GBP USD exchange rate further direction. Once again, a strong showing is likely to cause the pair to fall as investors trim their bets that QE is here to stay.

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