The pound was feeling generous in giving away pips to the dollar yesterday’s trading. Aaw, ain’t that sweet? Err, no. GBP/USD fell from its intraday high of 1.6152 all the way down to 1.6016 where it bottomed. Good thing it was able to pare some of its losses and close the day at 1.6044.
Despite high inflationary pressures in the U.K., it seems like markets have understood the BOE’s dilemma of hiking interest rates given the sluggish pace of growth in the country that was reiterated by BOE MPC member David Miles. In a speech to the Home Builders Federation yesterday, Miles said that the expectations for the standard of living in the country have been “shaken” as consumers go through a “painful transition.” Yikes!
On other news, the Nationwide HPI for March printed a 0.5% uptick and overshot the consensus forecast which was for 0.1% decline. I think speculations about the BOE pulling off its wait-and-see approach offset the good vibes the might have come from the positive housing report. It might probably even be the reason why pound tumbled to its five-month high against the euro at .8854 as the monetary stances between the BOE and the ECB begin to diverge.
For today, we only have the Manufacturing PMI for March scheduled to be released at 8:30 am GMT. Watch out for a figure higher than the expected 60.7 as this could probably be bullish for the currency. Who knows, it could convince traders to root for the pound as a positive figure would tone down the pessimism over the U.K. economy.