Data produced by HM Customs and Excise suggests that the recovery in the UK housing sector has slowed down. Completed home sales dipped by 4,000 over the August figure last month to 78,000. This figure was lower than the comparable value from September 2009 and represents the first year-on-year drop seen in 2010.

The Council of Mortgage Lenders reported (Wednesday) that lending in September had been at its lowest value for a September since 2000 at £12 billion. Lending in September was down by 1% on the August figure, but 7% lower than that seen last year.

The Bank of England has confirmed that lending on mortgages has declined and they expect it to remain subdued for some time to come. Dwindling demand for homes and loans is likely to cause a decline in UK house prices. UK home price inflation has vastly outstripped UK wage inflation for many years.

Pound Sterling – UK Markets

Sterling has continued to decline against the Euro and was a further 0.9% lower at yesterday’s close in Europe with £1 buying €1.1233. The currency recovered slightly against the US Dollar and the Japanese Yen closing at $1.5745 and ¥127.67, respectively.

US Dollar – US Markets

The US Dollar ended yesterday’s trading session down against the Euro with the single European currency buying $1.4016, a fall of 1.1%. In overnight and early European trading, the Dollar has rallied and is currently trading at $1.3941 (at 07:10 GMT).

It was the sub-prime crisis that triggered the global financial crisis and it has been suggested that US mortgage giants Freddie Mac and Fannie Mae must take their share of the blame. The cost to the US tax payer of rescuing these two companies which form the backbone of the US mortgage lending is expected to double and the ultimate bill could surpass $360 billion.

Euro – European Markets

In overnight and early European trading, the Euro weakened against Sterling and the US Dollar again. This may represent a pattern of profit taking since early numbers show that the Euro is again appreciating against them both. The Pound was trading at €1.1280 and the Euro was buying $1.3941 at 07:16 GMT, respectively.

The protests against French plans to raise the national retirement age to 62 are set to continue with two new days of (in)action called for 28th of October and the 6th of November by the unions.

Other Currencies – Highlights

All eyes will be on South Korea this weekend as the G20 finance ministers meet ahead on next month’s summit of G20 heads of state. The question of national tensions within the foreign exchange market is likely to take centre stage. China, the USA, Japan, Europe and South Korea have all voiced concerns (or denials) that nations are deliberately manipulating their currencies to gain advantage in export markets. The IMF has already warned of the disastrous consequences of what it terms as a “currency war” in which nations are taking steps to weaken their own currencies to provide temporary economic relief through better export performance.

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