Weak UK Housing Data

The weak UK housing data will reinforce fears over consumer spending trends and limit the scope for Sterling gains in the short term.

Sterling temporarily strengthened through the 0.76 level against the Euro on Monday before retreating to 0.7635. The UK currency also failed to hold levels above 2.02 against the dollar with a correction back to 2.01.

The data overnight on Tuesday was weaker than expected with the RICS index of house price trends weakening to an 18-year low of -64.1% in February from -54.7% the previous month. The British Retail Consortium (BRC) reported that like-for-like retail sales growth dipped to 1.5% for February from 2.6% the previous month. Activity in the housing sector was low which will lessen the immediate impact, but the weak data will reinforce economic fears and limit Sterling buying support.

Sterling was below 2.01 against the dollar in early Europe on Tuesday before rallying strongly again as the US currency came under selling pressure. The UK currency was slightly weaker against the Euro.

The Wednesday annual government budget should not have a major impact, but a sharp downward revision to growth forecasts would tend to undermine confidence.

Investica