Home Business News UK house prices continue to rise at a rapid pace and the strength of the dollar prevents the pound from rising

UK house prices continue to rise at a rapid pace and the strength of the dollar prevents the pound from rising

5th Jan 24 11:34 am

British pound is trying to reduce the losses it has suffered since the beginning of today’s trading and move towards achieving gains, after it reached the level of 1.26652 in the day’s maximum declines.

The recovery of the pound sterling came as the rise in house prices in the UK accelerated, in addition to the decline in the strength of the US dollar and Treasury yields.

Today, we witnessed the Halifax House Price Index rise to its highest level since last February on an annual basis, by 1.7% last December. This reading is also the first positive reading after a series of contraction in prices since May of last year.

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On a monthly basis, house prices continued to rise for the third month in a row last December by 1.1%, which was higher than expectations of 0.1%.

Today’s house price inflation figures come after November’s mortgage approvals have beaten expectations. Add to that higher-than-expected growth in services activity led by technology and financial services companies, according to S&P Global services PMI report for December as well.

These positive housing market data also come in light of concerns about weak demand in this most fragile sector of the economy, which has pushed home prices to contract at the fastest pace since the global financial crisis in 2008 earlier last year.

These figures also reflect a recovery in demand in the real estate market. While its continued rise may also enhance the safety of the banking system. The fragility of the housing market raised concerns from Bank of England (BoE) officials about the financial health of the economy, according to the Financial Stability Review report last December.

On the other hand, the continued flow of real estate market figures that exceed expectations may encourage BoE officials to hold interest rates for a longer period than expected, as concerns about the safety of that sector gradually subside.

In bond markets, a rise in US Treasury yields may continue to hamper sterling’s advance. The gains in bond yields come after a number of positive numbers for the US economy, whether from the labor market or the services sector.

The yield on ten-year Treasury bonds rose to the highest level since mid-December, reaching 4.023% earlier this morning before declining again. The negative start to UK gilt yields also contributed to putting more pressure on the pound as well.

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