Big Week Ahead for the British Pound

The British pound took another shot at its recently set 26 year high against the US dollar today thanks to hawkish comments from the Bank of England and stronger economic data. Both consumer spending and the housing market continues to remain steady with the Financial Times house price survey reporting a 0.7 percent rise in house prices in the month of June.

This helps to alleviate any concerns that may have come from the 18 month low hit by the RICS house price survey reported yesterday. Department store sales at retailer John Lewis increased 11.7 percent year over year last week thanks to clearance sales. This economic stability has allowed the Bank of England to focus almost exclusively on inflationary pressures, which continue to be a growing concern. BoE Chief Economist Bean warned today that the swings in actual inflation could “lead to inflation expectations becoming less well-anchored” and that it was extremely important for the central bank to keep inflation expectations anchored. In the week ahead, the British pound will be in play with a very busy economic calendar that includes inflation data, employment numbers, the minutes from the latest monetary policy meeting and retail sales.