Rightmove reported that home asking prices in Britain have experienced the most rapid decline in five years for this time of the year. Despite the housing market performing better than anticipated, average asking prices dropped by 1.7% last month, resulting in a roughly £6,000 decrease to an average of £362,143. This dip was attributed to elevated borrowing costs that cooled the market. Asking prices fell on a yearly basis in the Midlands and all Southern regions, while they increased in Wales, Scotland, and the North of England.
Although the UK economy has stagnated, it managed to avoid a recession this year, with the chancellor highlighting high inflation as the primary impediment to growth. Recent data from the Office for National Statistics revealed a 0.2% month-on-month growth in GDP, boosted by the film production, health, and education sectors. However, the August growth was revised down from 0.2% to 0.1%. While the figures suggest no growth in the third quarter, the UK sidestepped a recession, defined as two consecutive quarters of negative GDP. Analysts had predicted a 0.2% contraction for the latest period.
There is a possibility that UK inflation, as indicated by figures for October, has fallen below 5% for the first time in two years. This would be a significant achievement for Rishi Sunak, who pledged in 2022 to halve inflation from its previous level of 10.7%. The prime minister, who made inflation one of the key benchmarks for his premiership, could now claim that achieving a drop below 5% in the consumer prices index is one of the few pledges that has been verified. Inflation, which peaked at over 11% last year, has gradually decreased due to factors such as falling oil prices and the Bank of England's 14 consecutive interest rate increases.
David Cameron has expressed his intention to support Prime Minister Rishi Sunak during a challenging period, making a dramatic return to government in a major cabinet reshuffle. Appointed as foreign secretary and accepting a peerage, Cameron replaced James Cleverly, who assumed the role of home secretary after Sunak dismissed Suella Braverman. Cameron acknowledged that it's unusual for a former prime minister to return but emphasized his desire to assist during challenging times, particularly in the Middle East and Ukraine.
Experts have issued a warning about the US economy, stating that Treasuries are "no longer safe" following Moody's decision to change the outlook of Biden's government from "stable" to "negative." The rating agency downgraded the president's government, citing expected large fiscal deficits and a significant weakening of debt affordability.
Meanwhile, the European Central Bank (ECB) anticipates a rebound in eurozone inflation in the coming months, followed by a deceleration, amid uncertainties related to energy and food prices, heightened geopolitical tensions, and adverse weather events. ECB Vice President Luis de Guindos made these comments at the 26th Frankfurt Euro Finance Week, noting that Eurostat's flash estimate for October shows a 2.9% drop in eurozone inflation.
The pound initially fell last week to around 1.2190 but has recovered slightly to 1.2280. GBPEUR has remained pretty flat between 1.1440 and 1.1490, whilst EURUSD resides around 1.07 after falling slightly to 1.0640 towards the end of last week.