Market Report

June kicks off with weak data from the UK and strong noises from the US - indicating that it's not only (Sir?) David Beckham who's better off state-side.

After its sharp rally last week, Sterling dropped against the Euro and Dollar amidst signs that the Bank of England's four successive rate-rises have started to cool the UK property market. In April the number of mortgage approvals fell to the lowest in a year while borrowing on credit cards, personal loans and overdrafts declined to levels not seen since March 1997.

Inflation has reached a 10-year high and remains significantly above the Bank of England's target - rendering further rate rises likely. Interest rates are already at a 6-year high, darkening the outlook for debt-saddled homeowners.

In the US, employers increased hiring last month, signalling that the economy is rebounding from its weakest growth in four years. The Dollar should gain strength over the coming weeks on the back of further evidence that the US economy is bouncing back.

RL

An indication that house price inflation is slowing, lead to a poor performance by the pound yesterday day time and through the night, just like the weirdo's entering the Big Brother house yesterday evening. Roll on August is all I can say. The general highs of the pound seem to be coming to an end as further economic data strongly indicates recent rate increases are finally taking effect on inflation in the UK.

Elsewhere, the weakening pound is increasing the confidence in the two majors EUR & USD, even with the worst economic slump in the US for four years. In the Eurozone, the French Consumer Confidence was way up for May, giving a further boost.

In the Southern hemisphere, the South African Rand dropped in value dramatically after Bonds had there biggest one day decline in nearly a year, giving heavy indication to further rate increases. This, with the freak weather is making London a prime destination for holidays this summer!

LR

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