Up and down trading for the pound yesterday, although it remained within range considering how volatile GBP pairs are. After covering the weekend gap, the GBPUSD closed slightly higher, finishing the day at 1.4982.
The United Kingdom got a bit of good news yesterday, when net consumer credit figures came in slightly better than expected. ₤500 million worth of loans were issued to consumers last month, which beat consensus of a ₤400 million. This indicates that consumer access to credit is improving, which is a sign of financial stability.
However, the boys over at S&P still seem unimpressed, as they are maintaining their negative outlook on the economy. They warned yesterday that if the UK doesn’t fix its debt problems, it may not be deserving of its AAA rating. I don’t really blame them though – things haven’t been looking too rosy for the UK.
One thing to keep an eye on is developments in the political arena. As I’ve pointed out in the past, one reason why analysts are bearish on the British economy is because of the possibility of a hung parliament. What this means is that there could be no majority or ruling party in the UK government. How does this affect the economy? Well, one issue that the government needs to deal with is their growing debt. If government is split, then there could be a drag in coming up with any plans to address the debt problem.
In any case, Chancellor Alistair Darling will be speaking today at 8:45 am GMT. He may drop some comments regarding the S&P’s statements, so watch out for his speech.
Today we could be in for some major moves, as final GDP figures are due at 8:30 am GMT. No revisions are expected to be made from the last report, which indicated that the UK economy grew by 0.3% during the last quarter of 2009. However, if we do see a downward revision, all hell might break loose…
The Nationwide HPI report is also due at 6:00 am GMT. The index measures the change in selling prices of homes, and it is projected that housing prices rose by 0.2% in the past month.
Lastly, the current account is also scheduled for release at 8:30 am GMT. The deficit for the last quarter is expected to be at ₤4.6 billion, just slightly less than the previous quarter’s figure of ₤4.7 billion. Just recently, my main man Forex Gump made wrote a post about how the BOE actually wants a weaker pound in order to boost exports. Now, seeing as how the pound has been falling the past few months, could we see an upside surprise, and possibly even a surplus in today’s report?