Pound and property - For the first time since January 2011 this week more surveyors said London house prices had fallen than risen over the past three months. Given foreigners account for half the property transactions in prime London expect gloomy dinner parties from Singapore and Moscow to Sao Paulo and Mumbai. But how does this affect Britain? Data from Savills - an estate agent - show that in 2012 overseas buyers poured in £7bn of equity into prime London housing. That alone helped finance 12 per cent of the UK's current account deficit and partly explains the strength in sterling despite a yawning trade deficit. So if London property is a big UK export, falling house prices could be a terms of trade shock with implications for the pound. At least overseas dinner parties could then drown their sorrows in cheaper imports of Single Malt.

Eoin Treacy's view

Here is a link to the full note.

The Pound failed to hold the breakout to new five-year highs ahead of the Scottish Independence referendum and has since stabilised near $1.60. However a break in the short-term progression of lower rally highs, currently near $1.62, will be required to suggest a return to demand dominance beyond the short-term.