The pound soared to a one month high against the dollar on Monday, with more impetus potentially around the corner during a data-heavy week. A raft of releases over the next few days are expected to provide more evidence that the UK economy is rebounding from its deepest recession in 300 years.
The pair broke through the 1.39 barrier yesterday thanks to a sustained dip in the dollar’s value and the first piece of upbeat economic news from the UK calendar this week. According to Rightmove’s latest house price index, advertised prices for homes have hit an “all-time high” as properties sell at their fastest pace on record. The average asking price reached an all-time high of £327,797 following a huge 2.1% jump in just a month, exceeding the previous record from October 2020 by over £4,000. Despite the frenzied buyer activity, however, demand is still outweighing supply.
The UK’s largest property website also revealed that the average number of days it takes to sell a property has hit its lowest level ever recorded; and the number of houses selling in a week is reaching its highest ever level. Government initiatives such as the stamp duty holiday and the furlough scheme – both of which were extended by the chancellor Rishi Sunak during the Spring Budget – have stoked the UK property market.
By this morning, the pound vs dollar rate had risen to a fresh high as it touched the 1.40 level for the first time since 26 February.
Dollar slumps against pound
A lack of notable data from the US economic calendar this week means the dollar’s fortunes are at the mercy of US Treasury yields, which currently sit close to their lowest level in five weeks after the Fed reiterated its view that any spike in inflation was likely to be temporary. The US currency subsequently slumped against major peers on Monday, including the pound. Also pinning the dollar down was improved risk sentiment amid a rally in global stocks to record highs.
Investors will be monitoring this week’s PMI surveys for the UK, together with data on inflation and retail sales. Today sees three notable releases from the Office for National Statistics that will indicate the UK labour market’s current health: the ILO unemployment rate, the claimant count, and average earnings including bonuses.
Another quiet couple of days in the US economic calendar means Thursday’s initial jobless claims figure and the Chicago Fed national activity index are the first releases of note this week.