U.K. IHS Markit Household Finance Index rises in August

Households in the U.K. have given the least downbeat assessment of financial wellbeing since January 2015. The headline seasonally adjusted IHS Markit Household Finance Index rose to 45.9 in August from 45 in July. The strain on household budgets continued to weaken in August as a result of solid labor market conditions, survey-record income growth, along with slower declines in savings and cash available to spend. However, inflationary pressures continued to be elevated with perceptions around cost pressures sharpening in August.

In spite of households reporting a strong degree of positive sentiment towards current finances, the outlook towards financial wellbeing over the coming year slipped in the latest survey. The index dropped from the 28-month high of 51.7 to 46, hinting at renewed pessism towards future finances among U.K. households. Furthermore, the level of pessism was the greatest since March 2017.

U.K. households continued to record solid labor market conditions in August. Income from employment rose at a survey-record rate, thus extending the current phase of rising income to ten months. However, perceived job security worsened and inflationary pressures sharpened, thereby eating into household budgets in the latest survey.

After the base rate hike to 0.5 percent to 0.75 percent on 2nd August 2018, the latest survey data showed a sizeable number of U.K. households project another hike in the short-term. The outlook towards the next three months saw the most noticeable shift in expectations. Around 22 percent of respondents show a rise in the next three months, down from 30 percent in the preceding survey. In the meantime, there was a slight uptick in households forecasting a reduction.

At 17:00 GMT the FxWirePro's Hourly Strength Index of British Pound was slightly bullish at 56.0208, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -167.496. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex