Home Business News The pound fell with an unexpected contraction in house prices for the first time in five months

The pound fell with an unexpected contraction in house prices for the first time in five months

8th Apr 24 7:49 am

The British pound fell by 0.20% at approximately 6:15 a.m. GMT and reached the level of 1.26160 at its maximum decline on Friday.

While these pound losses came a few minutes after the announcement of the unexpected contraction in house prices in the UK for the first time in five months, as well as with anticipation of more decisive data from the labour market in the US.

The Halifax House Price Index contracted by 1% on a monthly basis last March, at the fastest pace since September of last year. On an annual basis, house price growth slowed to 0.3% from 1.6%. While both readings were below expectations, with growth of 0.3% and 1.5%, respectively.

This contraction in house prices may reinforce the markets’ hypothesis about the possibility of the Bank of England (BoE) cutting interest rates for the first-time next June.

It appears that the high financing costs and the continued rise in real interest rates, which have reached their highest level since 2008, have begun to take effect through this decline in prices.

While the decline in home prices in March may not be the new trend, this is what Kim Kinnaird of Halifax expects, who, commenting on today’s figures, said that this contraction was not surprising after five months of continuous growth, in addition to that this may be the upward trend in prices may continue in light of growing demand.

Today, the focus also turns to the US with the release of non-farm payrolls data for March, where the non-farm sector is expected to add 212 thousand jobs, in addition to the acceleration in growth in average hourly earnings to 0.3% on a monthly basis and unemployment remaining stable at 3.9%.

While the markets still expect the interest rate to be cut for the first-time next June, with a probability of more than 60% according to the CME FedWatch Tool, these expectations have declined slightly this week with more signs about the growth of economic activity. While the big positive surprise today, if we witness it, may put more pressure on these hopes.

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