Sunday is normally a day of rest but yesterday’s interview with Mark Carney in The Sunday Times has seen Sterling take a little positive jump after weeks of negativity.
A Contradiction in Terms
Even though we had extremely strong GDP figures out on Friday, the markets waited until Carney's hints that interest rate hikes may not be too far away to see a strengthening of GBP. The more eagle-eyed of you will note that this is completely contradictory to what was said just last week…. One of the issues that Carney is up against is that the UK Economy is outgrowing every other country in the G7. The growth of 3.5% is more than double that of the US which is at 1.7%.
Rumours were also circulating last night that Mark Carney and George Osborne have made a pact that would ensure interest rates remain at the current historic low until next year's general election. This is a pretty far-out accusation but shows the sort of things that markets will move on.
Housing prices down
House prices are also hugely down in the UK in the last month with London values down by 5.9% and nationwide prices down by 2.9%, which is a record for August. This was much steeper than expected and was due in no uncertain terms to Carney’s tougher new mortgage rules, anticipation of higher interest rates and lower wage growth.
It's a bit of a slow news day today with only housing market info out of the US being of any huge interest to the markets. We await with interest the MPC minutes which will be released this week.
Posted in Daily Market News on Aug 18 2014