UK housing prices rise faster than expected, defying recession
UK’s housing prices have rose faster than expected. The nationwide price rose 5.6% y-o-y, beating consensus forecast of 4.8% growth. The housing prices climbed 0.6% as compared to a month ago, contrary to the market’s forecast of a 0.2% fall. Strong housing prices nods towards resilience in the UK property market, and also alleviated concerns over a ‘Post-Brexit’ recession.
Sterling tumbled over 12% against the USD since UK voted to leave the European Union in June. The huge fall in the currency has made UK’s property prices more attractive to foreign buyers, who could become an external force to support property prices. The recent interest rate cut by BoE has also been accommodative to mortgage loans for the leveraged buyers.
GBP/USD rebounded on Wednesday, ending a four-day’s slump.
Strong USD weight on commodities
Crude oil prices continue to consolidate as the US dollar strengthened. Industry crude stocks data also indicated a build in US crude inventories, further suppressing oil prices. US crude inventory number climbed by 942,000 barrels to a total of 525 million barrels in the week to 26th August. WTI crude oil price has tested a key support level at US$46.30 area. The immediate support and resistance levels are at US$44.40 and US$49.38 respectively.
Gold prices continued to slide, while silver prices seemed to find some support at US$18.50 level, which is 61.8% on the Fibonacci Extension Level.
China PMI in focus
Today, China Manufacturing PMI will be the key data to watch. The country’s PMI has been hovering around the threshold mark of 50.0 for the last five months, showing that the world’s second largest economy is still finding a bottom while undergoing economic reforms.
Italy, Germany, UK and Eurozone will post their PMI in the afternoon. These readings are gauges of business conditions in these countries and thus will be consequential to equities and forex markets.
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Margaret Yang Yan