Money Transfer News: The pound recovers against the euro

The pound recovered the losses incurred on Monday after a day of better data releases in the UK and further poor data from the euro zone.

In the UK, the Nationwide reported that UK house prices rose by 0.4% in March to reach an average of £180,264 representing a price rise of 9.5% on the previous year, driven by London which continues to outpace the rest of the country.

London house prices jumped by a massive 18% year-on-year to reach an average of £363,699 in the first quarter of 2014, more than double the level of the rest of the UK and the UK now has the biggest disparity in house prices between London and the rest of the country for over 40 years..

Robert Gardner, Nationwide’s Chief Economist commented that “Indeed, the gap between house prices in London and the rest of the UK is the widest it’s ever been, both in cash and percentage terms. Overall, the southern regions have been outperforming for some time, with the result that house prices in London, the Outer Metropolitan and Outer South East have now surpassed their pre-crisis peaks.”

Gardner also said that a brighter economic outlook, record-low borrowing costs and government schemes that support mortgage lending has helped to lift the UK housing market. He also warned that demand continues to outstrip supply and that the number of new homes being built in England is still 40% below pre-crisis levels.

On a more negative note, John Longworth of the British Chambers of Commerce (BCC) said in an interview yesterday that the UK faces more ‘belt-tightening’ and “real austerity” to achieve sustainable economic growth as in his opinion, Chancellor George Osborne has only “bought time” on restoring growth.

In the euro zone, Eurostat reported that economic growth in the euro zone in the fourth and last quarter of 2013 has been revised downwards again from 0.3% to 0.2% but still remain higher than the third quarter’s anaemic 0.1% growth rate.

Eurostat also reported that euro zone industrial producer prices dropped by more than expected in February with the region registering an annual drop of 1.7% and a monthly drop of 0.2% ahead of today’s eagerly awaited European Central Bank (ECB) policy decision.

The US dollar rose yesterday after a second day of better than expected US economic data which showed that the US private sector added the most jobs in three months with private-sector employers added 191,000 jobs in March and also upwardly revised February's data to show 178,000 private-sector hires compared to a previous estimate of 139,000.

A separate report showed that US factory orders rose by 1.6% in February.

Overnight, HSBC / Markit reported that business activity in China registered its second consecutive contraction in March and at the sharpest rate since November 2011.

HSBC Chief China Economist Hongbin Qu said that the composite data showed that “the underlying strength of the economy is softening, which should ultimately weigh on the labour market”.