The pound has slumped to a 4 month low against the Euro this morning. House prices have dropped according to data from Halifax. House prices fell by 3.6% in September, according to the Halifax House Price Index which is the biggest monthly drop since the index stated in 1983. The average house price fell by about £6,000, to £162,096 last month.
The figure for the third quarter was less dramatic showing only a 0.9% fall. This led Halifax to conclude that it would be premature to say that house prices are now on a downward trend. The IMF warned yesterday that Britain could be facing a double dip in the nation’s house prices.
The dollar is still looking very weak allowing the Ozzy dollar to gain to a 27 year high and very close to parity for the first time in its history. The Euro is also rising again to a new yearly high at 1.400 EUR/GBP. Liquidity in the Pound/Euro cross has been sucked dry by this move which has prolonged a semi-artificial drop in the crosses rate of exchange.
The focus today will be the central bank meetings with both the European Central Bank and the Bank of England in quick succession. The effect on exchange rates could be pronounced as traders often look at central banks policy as the main driver of future currency movements.
