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The pound softens ahead of the latest Bank of England announcement
Published: 4 Jun at 9 AM Tags: Pound Sterling, Euro Exchange Rate, Euro Crisis, UK, Inflation, Spain,
Ahead of Thursday’s latest policy announcement from the Bank of England, the pound softened against a number of currencies including surprisingly the euro.
In UK economic data, Markit and the Chartered Institute of Purchasing & Supply (CIPS) published their latest UK construction purchasing managers' index which showed that UK construction activity expanded again in May for the 13th month in a row but at its slowest pace since October 2013.
The Markit/CIPS report showed that UK building output is still about a tenth lower than its pre-crisis peak but areas of concern include a lack of raw materials and the steepest drop in sub-contractor availability for almost 17 years.
CIPS Chief Executive David Noble commented that "With supply constraints still persisting, there are some concerns about how this prolonged period of growth can be sustained during the course of 2014".
Meanwhile, the Nationwide Building Society reported that UK house prices rose again in May for the 13th month in a row with a price rise of 0.7% in May against April and up 11.1% over the same month a year ago (against a 10.9% increase April to April).
By contrast, the British Bankers' Association (BBA) reported that mortgage approvals in April are about 17% below January's high.
Analysts suggested that the decline in mortgage approvals could be due to new mortgage rules launched in April that forced lenders to tighten up loan criteria to prevent borrowers overstretching themselves.
Howard Archer at IHS Global Insight said "While tighter mortgage lending standards appear to have at least temporarily taken some of the heat out of housing market activity, it remains to be seen if this is a permanent state of affairs. At this stage, house prices still look more likely than not to see pretty robust increases over the coming months."
In the euro zone, Eurostat reported that euro zone inflation continued to decrease in May increasing the pressure on the European Central Bank (ECB) to make a move at Thursday's meeting. Eurostat reported that euro zone annual inflation clocked in at 0.5% in May compared to the 0.7% reported in April.
The data keeps the pressure on the ECB to take action at Thursday's meeting as the reading remained far below the 2% inflation target.
Eurostat also reported that euro zone unemployment ticked down in April to its lowest level since October 2012 with the jobless rate dropping to 11.7% in April compared to March's reading of 11.8%. The Eurostat data estimates that 18.751 million people are now unemployed in the euro area with Greece and Spain continued to have the highest rates of unemployment with rates of 26.5% and 25.1% respectively and Austria and Germany showed the best readings with 4.9% and 5.2% respectively.
In UK economic data, Markit and the Chartered Institute of Purchasing & Supply (CIPS) published their latest UK construction purchasing managers' index which showed that UK construction activity expanded again in May for the 13th month in a row but at its slowest pace since October 2013.
The Markit/CIPS report showed that UK building output is still about a tenth lower than its pre-crisis peak but areas of concern include a lack of raw materials and the steepest drop in sub-contractor availability for almost 17 years.
CIPS Chief Executive David Noble commented that "With supply constraints still persisting, there are some concerns about how this prolonged period of growth can be sustained during the course of 2014".
Meanwhile, the Nationwide Building Society reported that UK house prices rose again in May for the 13th month in a row with a price rise of 0.7% in May against April and up 11.1% over the same month a year ago (against a 10.9% increase April to April).
By contrast, the British Bankers' Association (BBA) reported that mortgage approvals in April are about 17% below January's high.
Analysts suggested that the decline in mortgage approvals could be due to new mortgage rules launched in April that forced lenders to tighten up loan criteria to prevent borrowers overstretching themselves.
Howard Archer at IHS Global Insight said "While tighter mortgage lending standards appear to have at least temporarily taken some of the heat out of housing market activity, it remains to be seen if this is a permanent state of affairs. At this stage, house prices still look more likely than not to see pretty robust increases over the coming months."
In the euro zone, Eurostat reported that euro zone inflation continued to decrease in May increasing the pressure on the European Central Bank (ECB) to make a move at Thursday's meeting. Eurostat reported that euro zone annual inflation clocked in at 0.5% in May compared to the 0.7% reported in April.
The data keeps the pressure on the ECB to take action at Thursday's meeting as the reading remained far below the 2% inflation target.
Eurostat also reported that euro zone unemployment ticked down in April to its lowest level since October 2012 with the jobless rate dropping to 11.7% in April compared to March's reading of 11.8%. The Eurostat data estimates that 18.751 million people are now unemployed in the euro area with Greece and Spain continued to have the highest rates of unemployment with rates of 26.5% and 25.1% respectively and Austria and Germany showed the best readings with 4.9% and 5.2% respectively.
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Source: moneytransfer.co.uk