Wednesday October 6, 2004 - 10:09:51 GMT
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INVESTICA Ltd - www.investica.co.uk
Data jolts Sterling
Market expectations over a slowdown in the UK economy were jolted by the strong house-price data, but the impact has been lessened by poor manufacturing figures and markets will still be looking for opportunities to sell the UK currency. Sterling is vulnerable to a decline to 1.7750 against the US currency, but dollar strength will be needed to create additional losses
Sterling remained weak in early Europe on Wednesday, but was jolted higher temporarily by the Halifax housing data. Sterling rose to 1.7890 before dipping back to 1.7800.
The bank survey reported that prices rose by a much stronger than expected 1.4% for September with an annual increase of 20.5%. This will create some doubts over whether the housing sector is slowing as much as feared by the markets and there will be greater caution over selling Sterling aggressively.
The manufacturing data, however, was much weaker than expected with a 0.8% decline for August compared with expectations of a 0.3% increase, the largest decline since October 2002. The net effect will be to create some caution over aggressive Sterling selling, but markets will still want to sell the currency.
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