UK House Prices continue to fall as Outlook looks Worse

UK Housing prices have further to fall and the sector continues to contract, according to Bank of England data today. The FT reports that the number of mortgages for new house purchases in August fell to a record low of 32,000 while re-mortgaging activity has also slowed sharply. The number of new house purchases is well below the 49,000 monthly average of the previous six months. The number of remortgages slowed to 64,000 in August, lower than the 69,000 rate in July and well below the six month average of 88,000 per month.

“The rate of growth in lending to the household sector also slowed in August, with a rise of £1.9bn, equal to a one month growth rate of 0.2 per cent. Over the past 12 months, lending to the household sector rose by 7.5 per cent, against a 12 month growth rate of 8.7 per cent in May. Loans to the private non-financial sector also declined. Loans fell by £1.8bn, a growth rate for August of -0.7 per cent. for the 12 months, lending to that sector declined by 2.8 per cent.”

This helped to drag the Pounds to Euros Exchange rate back below 1.2600 and the pound exchange rate outlook is sub 1.2400 just when we thought we were going to test the 1.3000 level.

Bye for Now

Forex Trading Reports

Pound rallies against the US Dollar but still the whipping boy of the Euro

Hi All,

foreign exchange traders contiune to buy pounds against the US Dollar, Australian Dollar, South African Rand and New Zealand dollar but cant seam to beat the Euro with the Euros to Pound exchange rate stuck in the 0.7900 to 0.8000 zone.

Even the fact that the French EDF have announce their intention to buy British Energy for 12 billion pounds hasnt pushed the euro pounds exchange rate lower. So what is needed? Probably best not to remind anyone of high street bank mergers/failures at this point or housing sales being the lowest on record.

Personally i cant see why the euros to pound exchange rate cant breach the 0.7700 level which is still well above the 0.6580 low of last year. All i can suggest to those of you with a Spanish Mortgage is buckle up 0.8200+ cant be far away as foreign exchange traders live by the motto
if you cant sell it, you might as well buy it and if the Euro to US dollar exchange rate heads back above 1.5000 i cant see it dragging the pound with it.

Exchange rates never do what you want them to do but remeber you never go broke selling pounds

Bye For Now

IMS foreign Exchange

Buying Euros, Buying Australian Dollars visit www.imsfx.co.uk for a free currency quote

Pound falls lower and Hits a record low against the Euro

Sterling's slump deepens as recession looms
By Edmund Conway, Economics Editor

Labour's sterling crisis is intensifying with the pound slumping to a new 16-year low.
The fall was triggered by an OECD warning that Britain is already in recession and the Government's pledge to spend £600m bailing out the housing market.

The pound, which has been tumbling in the past month, dropped to a new record low against the euro and hit a 2½-year low against the US dollar as foreign exchange traders continued to sell out of their sterling investments.

In early morning trading today it almost fell to $1.77 and the pounds to euros exchange rate was at 81.42p. The declines took sterling to 88.5 against a basket of other currencies - the worst overall level since the aftermath of Black Wednesday in 1992.

The falls came after the Organisation for Economic Co-operation and Development warned yesterday that Britain is in the first throes of recession. The Paris-based OECD became the first major forecaster to declare explicitly that Britain is in a technical recession - where the economy contracts for two consecutive quarters.

To make matters even more uncomfortable for Gordon Brown, it said Britain is the only major economy facing recession in the next six months. The Prime Minister had claimed previously that the UK was well placed to withstand the downturn.
The OECD said the economy will shrink by 0.2pc by the end of the year - the worst performance since the recession of the early 1990s.

Full story visit The Telegraph

Bye for now

IMS Foreign Exchange - For the Best Exchange Rate visit www.imsfx.co.uk

What’s Happening This Morning in Foreign Exchange Markets

What’s Happening This Morning in Foreign Exchange : The US dollar traded sideways yesterday, opening around 1.4890 at 8 am and closing around 1.4919 at 6 pm in New York. This is a tiny rise in the euro—but other currencies put in proportionately bigger gains, like the Canadian and Australian dollars, and chart-readers could easily talk themselves into seeing the makings of a correction.

Even the Pound was so oversold that it flattened on the hourly chart, and we got a buy signal for the yen in futures.

Important indicators like the MACD, relative strength and the awful stochastic oscillator all pointed upward.

It looked like a correction was about to occur, and since the US dollar’s move up was so big and fast, it might be justifiable to imagine the correction would be equally big and fast. Well, we have a corrective impulse but so far it’s not worth much—a few points, and hardly convincing. Those of us who jumped on the early warning signs of a correction are eating crow this morning—but don’t forget CPI at 8:30 am ET. There is still room for it to take off—or fail miserably.

That is why conditional trades were invented.

Happy Trading

Barbara Rockefeller

For the best exchange rates when Buying Euros visit IMS

The UK reported a veritable blizzard of bad news today—no wonder the Pound was is falling off the cliff.

The UK reported a veritable blizzard of bad news today—no wonder the Pound was is falling off the cliff.

The Royal Institution of Chartered Surveyors said the number of agents and surveyors reporting lower prices exceeded those reporting gains by 83.9% in July, bringing the housing market to a “virtual standstill.” All 11 regions showed negative price balances on the month. This is consistent with the reports from mortgage lenders. Separately, the government reported June house prices up 0.6% y/y after 0.3% in May.

Surely buying activity rises when prices bottom, but they seem to be rising still (although the RICS report is for July and the government report on house prices is for June). Hmm.

The British Retail Consortium reports July like-for-like retail sales down 0.9% after a June drop of 0.4%. Total sales rose 1.7% y/y after 2.1% y/y in June. Market News says “UK consumer spending is fading.”

July consumer price inflation jumped to 4.4% from 3.8% in June, the highest since April 1992 and over forecasts of 4.1%. The FT reports that CPI inflation has now climbed almost 2% in the last four months, “and is set to spike higher as big increases in utility tariffs take effect.” An analyst said it’s almost certain inflation will rise above 5% in the next few months.

We get the BoE policy committee Inflation Report tomorrow.

Clearly the scope for a interest rate cut to goose business is getting tiny, if it still exists at all. Having said that, the rise in inflation is due to energy prices and food, not things that monetary policy can affect. Food and drink has risen 12.3% y/y, the fastest in 10 years. Still, core inflation is up to 1.9% from 1.6%, so rising prices are more broad-based. To make life difficult, the retail price index (includes mortgages) rose to 5% (from 4.6%), and the RPIX index (excludes mortgage interest payments) rose to 5.3%.

All in All the Pound is in trouble

Bye For Now

Barbara Rockefeller

Best Exchange Rates visit IMS Foreign Exchange

US dollar benefited from falling oil prices

The US dollar benefited from falling oil prices yesterday (under $120) and rose against all other currencies except the Mexican peso, which is on a tear of its own (possibly due to speculative repatriation). At 8 am, the Euro opened the US day at 1.5576 and closed the day around 1.5570, which doesn’t sound like much but represents a nice drop from the early morning high at 1.5632. In other words, traders were buying Euros tried to rally the Euro and failed. This did not go unnoticed overnight in Asia, where traders were selling Euros through the Friday low at 1.5510 and into the 1.5400 territory a round number breakout.

At 7:53 am ET, the price of oil is $118.82. The US dollar doesn’t get full credit for the Euro it’s weak across the board, including the yen and pound crosses.

The Pound, meanwhile, fell dramatically in mid-morning in the US, with Currency Traders trying to rally it but managing only 1.9718 before bears got the upper hand and tanked it over 100 points down to 1.9597, again a round-number breakout. Overnight the currency market took the pound down as low as 1.9518, or 200 points in less than 24 hours.

Australian Dollar suffered as the The Reserve Bank left rates on hold at 7.25% but Gov Stevens said "The board judged that the cash rate should remain unchanged this month. Nonetheless, with demand slowing, the board's view is that scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing." The Australian Dollar fell off the cliff. The next policy meeting is Sept 2. A cut then would be the first in 7 years. For the

Full Story visit Rockefeller Treasury Services

For the Best Exchange Rate contact IMS Foreign Exchange

Pounds to Euros currently 1.2593

Pounds to US Dollars currently 1.9621

Pounds to Australian Dollars currently 2.1086

More on the Big Mac Index

More on the Big Mac Index. One of my favourites

The Economist magazine published its most recent Big Mac evaluation, finding that the yen is 27% undervalued against the dollar, the euro is 50% overvalued and the pound is 28% overvalued. China is 49% undervalued. The survey compares the price of a single item, a McDonald’s Big Mac hamburger, around the world. Except for the yen, everything is overvalued against the dollar and more overvalued than a year ago. The IMF found last week that the dollar was properly valued although the euro was overpriced.

Traders Buy the Pound - than Sell the Pound!

Today was the story of two numbers for the Pound, the;

1. Consumer Price Index
2. Consumer Price Index Core Number

Firstly the Consumer Price Index came in a lot higher than expected at 3.3 percent and as a result traders bought the pound. But those who dug a little more found the Core Inflation number was only 1.5 percent well in line of the Bank of England's target and those who bought the pound vs the Euro and Dollar than sold it heavily.

None the less the inflation number doesn’t bare well for the UK Housing market as there is really no chance of a Interest Rate Cut in the UK any time soon as Bank of England's Governor King had to write a letter to Chancellor of the Exchequer explaining why inflation is over target.

In this letter King has pointed out "as things stand, inflation is likely to rise sharply in the second half of the year to above 4 percent".

The Bank of England's primary role is to insure Financial Stability and to keep Inflation Below 2 percent.

want to know more - contact us at www.imsfx.co.uk

Spanish Property in for more Doom as ECB's Weber said investors should prepare for an increase in interest rates.

Spanish Property in for more Doom as ECB's Weber said investors should prepare for an increase in interest rates.

At IMS FX we have been keeping a Eye on Spain and now see that Spanish Prices are unlikely to recover any time soon as ECB's Weber said investors should prepare for an increase in interest rates.

Pound Woes Continue

The Pound is still on shaky ground at the moment and is still hanging onto the 1.9500 level. The current mortgage and housing market conditions in the UK look set to effect the UK economy in a major way and will increase the pressure on the Bank of England to cut rates this week. This though will only strength the Euro Pound exchange rate to above 0.8000.