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Sterling Gains on US Housing Data

Sterling Gains on US Housing Data

The pound sterling and global stocks rose on Thursday after better-than-expected US housing data was released.

Investors headed away from safer investments as risk appetite increased, dampening demand for the US dollar.

The pound also rose against the euro, as good housing data was also announced for the United Kingdom. 

A survey showed that UK house prices had risen by 0.5 per cent in May – while a smaller increase than in the previous two months, this was still enough to mean that property values are now within 10 per cent of their peak in 2007.

There are still concerns regarding the outlook for the UK’s economy, especially given the large deficit.  However investors are still confident that the UK economy is stronger than that of the euro zone – allowing more interest in the pound than in the euro.

The euro did manage to make gains against the yen on Thursday, as the latter’s difficult week continued.  Earlier in the week the yen took a knock after the Japanese prime minister quit after nine months in power.

It is now expected that the next man to take the helm, Naoto Kan, may call for caps on the yen’s strength.