Boy! There’s nothing like risk aversion to get the market sheddin’ pounds! GBP/USD ended the day at 1.6269, 159 pips below its opening price. Meanwhile, GBP/JPY retreated from its intraday high of 130.87 to end the day at 128.71.
Concerns over the capability of euro zone countries to pay their debts dominated market sentiment and had investors fleeing higher-yielding currencies. Aside from that, it also didn’t help that the market didn’t see any pleasant surprise in the BOE’s interest rate decision.
As everyone expected, the BOE MPC left rates unchanged at 0.5% and maintained its asset purchase facility of 200 billion GBP. From what I’ve heard from a few market junkies, it seems like the MPC was more concerned of slowing growth in the U.K. than the rising inflation.
However, perhaps the PPI report for July will be able to get investors giddy that rising prices in the country is something the BOE can just ignore. At 8:30 am GMT, the PPI input report is anticipated to print a 0.6% uptick, higher than the 0.4% reading we saw for June. Meanwhile, the price of goods sold by manufacturers is anticipated to post a modest increase of 0.2% for the month.
Watch out for positive figures as these will probably be bullish for the pound!
But before the PPI figures, we’ll get dibs on how the U.K. housing market is doing. At 7:00 am GMT, the Halifax HPI for July seen to show a 0.1% increase in house prices.