The pound reached its highest level against the Australian dollar since September 2009 after the publication of the worst job market report down under for 8 months increased speculation that the Reserve Bank of Australia (RBA) will cut interest rates from its already record low to bolster the faltering Australian economy.
The pound was also supported by a report from the Royal Institution of Chartered Survey (RICS) that UK house prices are expected to increase further as supply fails to meet demand. RICS said its December report showed a net balance of 61% of surveyors are forecasting price rises over the next three months, up from 59% in its last survey in November and the strongest consensus since September 1999.
Of interest, the survey also revealed house prices jumped across every area of the UK in December.
Peter Bolton King, Global Residential Director at RICS commented that “On the face of it, the survey seems like good news but unless we see a marked increase in the number of homes coming up for sale we could well be looking at price rises becoming unsustainable in some areas".
Meanwhile, Bank of England Governor Mark Carney also commented on the state of the UK housing market suggesting that UK house prices would continue to accelerate until the middle of next year. Carney is also opposed to the idea of a “crude bonus cap” and of forcibly reducing retail the market current of the UK retail banks, dealing a blow to Labour leader Ed Miliband’s proposals to shake up the banking sector.