Pound Bought as Home Prices Slide Stokes Stimus Expectations
THE TAKEWAY: Nationwide house prices in U.K. slide -0.06% from May to June and down 1.5% over last twelve months > Indicates potential deflation may be on horizon > GBP accelerates on possible future stimulus measures.
The Great British Pound bid higher as U.K. Nationwide house prices fall by 0.06% in June. Prices also slid 1.5% over the last year providing a signal that deflation may be on the horizon. Declining house prices may also help confirm that a flagging U.K. economy may continue into the future which could prompt policy makers to offer additional quantitative easing. Traders may react to the bad news in a bullish fashion as added stimulus yields support to riskier assets such as the Sterling when paired against the safe-haven U.S. Dollar.
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