30 Aug 2017

Market Brief: House price growth slowed to 2.1% from 2.9% in July amid fears that post Brexit inflation is causing a squeeze on household spending.

Shaun Garrett

Dealing team

Latest rates   Today's data release
GBP/USD GBP/EUR GBP/AUD GBP/AUD GBP/CHF 09:30 UK net consumer credit
1.2910 1.0790 1.6205 1.6170 1.2230 13:15 US ADP report
GBP/JPY GBP/HKD GBP/ZAR EUR/USD EUR/GBP 13:30 US GDP
142.10 10.1040 16.8000 1.1960 0.9265
Investec currency forecasts as at 27 July 2017 Key levels
  Q3 '17 Q4 '17 Q1 '18 Q2 '18 Support Resistance
GBP/USD
1.29 1.30 1.30 1.31 1.2770 1.2985
GBP/EUR 1.13 1.14 1.13 1.13 1.0740 1.0880
market brief daily chart
Market overview

On what was a pretty quiet day on the data front yesterday a report by the Nationwide painted a damp picture on the state of the housing market in the UK. House price growth slowed to 2.1% from 2.9% in July amid fears that post Brexit inflation is causing a squeeze on household spending. The Nationwide spokesman stated ‘wages have been failing to keep up with the cost of living in recent months and consumer sentiment has weakened’. Despite the recent slowdown the Nationwide still expects prices to rise by about 2% overall in 2017 due to constrained housing supply.

The U.K. has asked for more Brexit negotiating sessions with its European counterparts, according to a person familiar with the discussions, as the latest round of talks showed little sign of progress amid public criticism from each side. The U.K. wants to step up the pace of talks, according to the person, who declined to be named because the discussions aren’t public. Negotiations on Tuesday focused on the divorce bill, one of the thorniest issues as the U.K. has refused to say how it thinks the settlement should be calculated -- let alone how much it might pay. European Commission President Jean-Claude Juncker joined the bloc’s chief negotiator in lashing out at the U.K. for failing to prepare for Brexit talks, as the third round of negotiations looked set to produce little progress. “I’ve read all the position papers produced by Her Majesty’s government and none of them is satisfactory,” Juncker said on Tuesday at a conference in Brussels, as talks between the U.K. and the EU resumed. “There is still an enormous amount of issues that remain to be settled.”

The day ahead

Although still relatively quiet on the data front today we start to look towards the non-farm payrolls data on Friday. Today we get a sneak preview of what we can expect when the much maligned ADP Employment is released at 13.15 this afternoon – a relatively buoyant number of 185k is expected. 15 minutes after the ADP report US GDP figures are released. However despite all the data the markets are still nervous around the dollar, the missile launch and Storm Harvey have caused market uncertainty and it still feels like we haven’t quite heard the last from Trump this week yet.

Thought of the day

This week has seen the start of the 137th US Open in New York City. A total purse of $50,400,000 will be spread across the world’s best tennis players throughout the course of the next 2 weeks with the champions taking home $3,700,000 each. Flushing meadows was plagued with rain yesterday as all outdoor courts were ruled out early in the day. Great Britain has lost all female attention at the event with no lady passing the first round, the men have 3 remaining but Andy Murray has already pulled out with a hip injury! Current men’s world number 1 Rafael Nadal was in fine form yesterday with a straight sets victory under the lights of Arthur Ashe. Darting around in fluorescent pink he would surely be forgiven for watching the current EURUSD moved with a potential $3,700,000 up for grabs. Amazingly the Spaniard would have been looking at receiving 3.3m Euros from this purse last year but with the current move higher more likely under 3.1m Euros, a 200,000 Euro loss on last year! If your concerned about current FX market moves give the Investec dealers a call today where we will be happy to serve up a strategy.

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