After a turbulent end to November, the pound really hit its straps in the second half of this week. Boosted by positive economic data, sterling begins Friday at its best level since the end of October against both the euro and the US dollar.
Housing costs still reflected some lingering uncertainty, however. Per the monthly report by Halifax, house prices in the United Kingdom were unchanged in November from the month prior, undershooting expectations of a 0.2% increase. That took the average purchase price just a few pounds shy of £300,000, with mortgage affordability at its best in three years.
Things weren’t quite as rosy in the building sector. In the run-up to the autumn Budget, new orders dropped to their lowest since the Covid-19 pandemic. Infrastructure and residential building work were the particular low points in S&P’s report.
The end of the year is typically a quiet period for financial markets. This year, a pair of high-profile policy meetings from the Bank of England and the Federal Reserve respectively promise a change of pace. Both are expected to announce a quarter point cut. In the Fed’s case, 82% of economists in a recent poll conducted by Reuters expect that outcome, a trend that is weighing on the dollar.
An added layer of intrigue in Washington is the race to succeed Jerome Powell as Fed chair. Kevin Hassett is the frontrunner if you listen to the media, but his candidacy is prompting some unease on Wall Street. The thinking is that Hassett, who called Powell a “stubborn old mule” over his interest rate caution, might be tempted to throw caution to the wind in a bid to jumpstart growth.
And it’s full steam ahead for India. The Reserve Bank of India cut interest rates to 5.25% this morning amid high growth and stable inflation. A fair few nations might be looking at this “Golidlocks period” with a smidge of envy, particularly after the economy grew by a whopping 8.2% in the three months to September.
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