Forex snapshot

Sterling is sliding versus the US dollar after house prices in the UK fell, while the euro is back above the $1.36 mark as traders look ahead to Mario Draghi’s speech tonight.

Pound coins
Source: Bloomberg

Housing data hits GBP/USD

The pound is trading at $1.7116, and has lost ground after the Halifax survey revealed a drop of 0.6% in house prices in June, compared with a rise of 4% in May. This should take some pressure off Mark Carney as he has voiced his concerns about a booming British property market.

The Bank of England was recently given power to regulate the mortgage lending of UK banks, so the decline in house prices in June was not influenced by the central bank.

The poor industrial and manufacturing figures yesterday, and the soft housing data today have taken the momentum out of the pound.

If the GBP/USD can hold onto the $1.71 level, it could head to $1.7175 providing the Federal Reserve minutes at 7pm (London time) are on the dovish side. 

Euro traders await Fed minutes and Draghi speech

The euro is trading at $1.3613 and there has been little volatility in overnight trading.

With the jobs market in the US moving in the right direction, I still suspect the Fed will talk about a broad range of indicators and that low interest rates and a stimulus package are still required.

Mr Draghi will be giving a speech at 7.30pm tonight, and he is unlikely to deviate from the European Central Bank’s stance from last week, where he stated rates will remain unchanged for an extended period.

A dovish set of minutes from the Fed could see the euro target the $1.3660 mark with $1.3580 acting as support.

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