Last Friday provided another green day for the pound bulls as better-than-expected reports from the U.K. mixed in with broad dollar weakness in markets. Cable ended up flying by 122 pips to 1.6390, while GBP/JPY eased from its 127.40 intraday low and closed at 128.62.
Even though markets were focused on the NFP report and the Greenback drama last Friday, the pound was able to sneak in gains on its better-than-expected Halifax house price index. The report came in with a 0.3% growth in July when market geeks were only looking for a 0.1% growth. Meanwhile, producer prices in the U.K. accelerated by 0.6% in July, which pushed its annualized rate to the fastest rate since October 2008. Will fast acceleration of producer prices weaken the BOE’s dovish stance?
Maybe not in the near future. You see, the BOE (and the rest of the world markets) is currently fidgeting about the U.S. credit rating downgrade drama as well as the possibility of a slowdown in global economic recovery. In the meantime though, we can turn our trading focus to the U.K. reports around the corner this week.
The reports will start pouring in today at 11:00 pm GMT when the U.K. releases its RICS house prices report and the BRC prints its retail sales report. A positive RICS data might support the Halifax index we saw last week, which might give lift the pound higher in the charts.
The action will continue tomorrow at 8:30 am GMT when the country releases its manufacturing production, trade balance, and industrial production report. Pretty major reports, if you ask me. At 2:00 pm GMT the National Institute of Social Economic Research (NIESR) will publish its GDP estimate for the second quarter.
The last major reports to come our way this week will be the BOE inflation report on Wednesday at 9:00 am GMT, followed by a speech by the BOE Governor Mervyn King. Lastly, the CB leading index will be published on Thursday at around 9:30 am GMT.
Don’t even think of missing these reports, kids!