The pound has declined below the 1.24 level against the US dollar this morning as political developments continue to impart downward pressure on the currency. The FTSE 100 has benefitted from this and risen by more than 35 points since the open to trade at its highest level in over a fortnight.
UK house prices fall
The latest Halifax house price index has shown a 0.9% month on month decline, coming in well below both the consensus forecast and prior readings. The figure represents the second worst since the EU referendum last summer and may serve as a warning sign as to the health of the housing market. It should be pointed out that this data point seems contrary to the prevailing trend and one bad reading doesn’t necessarily mean house prices are set to fall, but with recent surveys of business leaders showing the majority believe that Brexit has already had an adverse impact, and this coming before the process of leaving the EU has even begun, today’s data could be seen as a potentially early warning sign of what is to come.
False dawn post-Brexit?
Following the sharp rally in sterling after Theresa May’s Brexit-objectives speech and the continued solid economic data from the UK, you may have been forgiven for thinking that the worst was behind us with regards to the UK leaving the EU. However recent developments have served to dispel this notion as several signs are suggesting that under the surface the problems are growing. Yesterday saw the majority of business leaders surveyed express their belief that the historic vote had already adversely impact their company and this morning’s sharp drop in the Halifax house price index - the second steepest since last June’s referendum - serves as a further warning sign. With the government seemingly on course for triggering Article 50 by the end of March, this week’s releases indicate that the uncertainty going forward is already weighing on sentiment and this is likely to only increase in the coming months.
Broad move high for UK stocks
One aspect of this morning’s rally in the FTSE 100 is the breadth that is seen with the vast majority of shares joining this latest leg higher. Taylor WImpey and Barratt Developments (LON:BDEV) have both recovered Monday’s losses despite the soft house price data whilst Fresnillo (LON:FRES) and Randgold Resources (LON:RRS) continue to rise on the back of the sustained price increase seen in Gold. Only half a dozen companies aren’t in the green at the time of writing, with BP (LON:BP) a notable faller after posting results prior to the open. The oil major reported a profit of $115m after a loss of $6.5bn in 2015 but despite this the stock has seen some softness, perhaps due to the reduction in capital expenditure which may suggest that the firm isn’t overly optimistic going forward - despite the rise in crude over the past 12 months.