August 15, 2012
Chop, chop, chop! GBP/USD made a few spikes here and there but managed to end right where it started at 1.5685. GBP/JPY, on the other hand, was able to pocket some gains as it closed at 123.49. Which reports moved the pound pairs yesterday?
U.K. inflation surprised to the upside for July, breaking its streak of declines and weaker than expected results. Annual CPI jumped from 2.4% to 2.6% during the month instead of falling to 2.3% while the retail price index rose from 2.8% to 3.2% in the same period. Components of the data revealed that the increase in price levels was spurred by a sharp rise in clothing, airfare, and footwear in the weeks leading up to the London Summer Olympics. However, since house prices weren't really affected by the Olympic games, the house price index missed expectations of a 2.7% rise and came in at only 2.3%.
These stronger than expected inflation figures gave pound pairs a boost during the U.K. session, but GBP/USD's gains were quickly erased once the U.S. session rolled along. As it turns out, Uncle Sam printed better than expected retail sales data which triggered dollar-buying.
Today, the U.K. is set to release another set of top-tier data, namely its claimant count change figure and MPC meeting minutes at 8:30 am GMT. The number of people claiming unemployment benefits is expected to tick up from 6.1K in June to 6.2K in July, reflecting a slight downturn in the U.K. labor market. This could be negative for the pound unless the actual figure posts a smaller than expected increase in claimants.
Meanwhile, the MPC meeting minutes are expected to reveal a unanimous 0-0-9 decision when it came to the BOE's announcement to keep rates on hold during their previous policy statement. Make sure you also take a look at what each of the committee members had to say during their meeting since this could set the tone for their future policy decisions.
Quite a busy day for the U.K., eh? Be extra careful when trading those pound pairs today!
"The only cable I watch is the pound baby."