British pound is trying to consolidate a little today and reduce its losses that took it to the level of 1.25447 in the morning against the US dollar, but it was able to rise again to erase its early losses and reach the level of 1.25860 at approximately 7:45 a.m. GMT.
Meanwhile, the Euro is also trying to reduce its losses against the British Pound (EUR/GBP) after reaching the lowest levels in three months yesterday at 0.85535, while the pair is rising by 0.02% today.
The pound’s gains came with more data showing some positive signs about the health of the housing market. The Halifax House Price Index recorded growth for the second month in a row by 0.5% on a monthly basis last November, which was higher than expectations of 0.3%. On an annual basis, house prices contracted at the slowest pace since last April, thus by 1% in November.
This improvement in home prices reflects some of the recovery in demand in a deteriorating housing market.
Today’s figures also come after negative signs that we witnessed yesterday, whether from the Financial Stability Report, which did not hide the fear of policy makers at the Bank of England (BoE), in addition to a further contraction in construction activities, with the weaker than expected reading of the construction PMI.
Members of the Financial Policy Committee (FPC) at the BoE spoke about their outlook on the British economy.
Despite the positive outlook that comes from the strength of the banking system and the profitability of companies, the report spoke about the fragility of the housing market, with the rising burden of mortgage payments on individuals, which may continue to rise for a number of years to come, as the rise in interest rates may take a long time to take effect.
The S&P Global/CIPS Construction PMI report for November showed more weaknesses in the real estate market as well. The decline in demand in this market has pushed raw material prices to their lowest levels in more than a decade, in addition to the severe decline in employment and civil engineering activities.
However, if house prices continue to rise and maintain this trend, it may encourage BoE to keep interest rates high for a longer period than expected, as its officials have repeatedly confirmed recently.