Money News Overview Friday 30th August: Pound remains bullish ahead of next week

House Prices Dip Amid Rate Cuts: What’s Next for the Market?

This month saw a slight drop in house prices, with a 0.2 percent decline—the first since April. Despite this dip, annual house prices are still 2.4 percent higher than they were in August last year.

Earlier in the month, the Bank of England reduced its base interest rate from 5.25 percent to 5 percent. As interest rates gradually fall, we could see house prices begin to rise again. Lower rates tend to encourage more people to enter the housing market, boosting demand and driving up prices.

Looking across Europe, markets are closely watching inflation data. Inflation is expected to move closer to the European Central Bank’s target of 2 percent. With German CPI showing a significant drop yesterday, the ECB may have little choice but to cut interest rates in their next policy decision.

In the US, the Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditure (PCE), is forecasted to rise by 0.5 percent, suggesting a potential increase in inflation.

Meanwhile, the pound surged against the euro yesterday, following lower-than-expected inflation figures from Spain and Germany. The GBP/EUR pair is testing a key resistance level as it holds near a two-year high.

Looking ahead, next week’s market focus will shift to German, French, and UK manufacturing data on Monday, followed by EU retail sales figures on Thursday. Friday brings a key update from the US with the latest employment and non-farm payrolls data, which could provide further market direction.


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