While the pound is up on the dollar compared to this time last week, Tuesday saw the US currency begin its catch up in earnest. The news comes as the IMF gives Rachel Reeves a warning.
Traders have been worried that US President Trump could reinstitute his 50% tariffs on the EU, massively impacting global trade. So news that the US and EU are making progress on a trade deal has reassured the markets, leading to stock market growth and yesterday’s 0.6% climb in the dollar.
Though, as Trump has proven in his four months in office, there’s every chance his patience with the trade negotiations could run thin.
While the UK has seen off the immediate threat of more tariffs, the IMF has pressed UK Chancellor Rachel Reeves to “refine” her fiscal rules to allow for more government borrowing. The organisation says that, without more fiscal headroom, further economic shocks would force the government to raise taxes and make substantial cuts to find the money.
To protect your budget from economic shocks, lock in today’s GBP/EUR rate with a call to your account manager on 020 8003 4915.
One impact of Reeves’ Autumn budget, which came into effect at the start of April, can be seen in the UK housing market.
With increases to stamp duty, house buyers and sellers are agreeing to prices 4.5% below asking. According to property portal Zoopla, this is despite a 6% increase in the number of house sales compared to May last year. While there is increased activity, there has been a 13% increase in the number of properties on the market, giving buyers a lot more options to choose from.
Overall, while houses are going below asking, the value of the final sale is still up 1.6% in the past year.
A rise in home sales following an increase in stamp duty is an unusual change in the market. Showing, as ever, the impact of a government budgets is difficult to predict. And, what a budget will mean for your money in a month’s time – let alone a year – is impossible to say.
