House prices and manufacturing both fall

1 September, 2011


In further damaging news for the UK economy, house prices and factory manufacturing both fell significantly in August, in further bad news for the outlook for the Pound.

– House prices fell at their fastest rate since October last year, posting a 0.6% drop in August, according to Nationwide
– Factory activity shrank at its fastest pace in over 2 years

The recurring theme of poor data is reinforcing the view that UK interest rates may not now rise until early 2013. The Pound, which reacts strongly to interest rate expectations, is now more unlikely to stage any kind of general medium term recovery.

Talk of further Quantitative Easing, to stop a double-dip recession, could also weigh on sterling in the coming weeks.