Aaaand the pound is back in action! After consolidating for almost a couple of days, pound pairs broke out of their ranges and made strong moves yesterday. GBP/USD tumbled from its 1.5639 open price to close at 1.5517 while GBP/JPY managed to end 2 pips above the 120.00 handle.
The BOE’s latest monetary policy meeting minutes revealed that the MPC members were unanimous in their decision to keep asset purchases unchanged during their November statement. They did point out that the worsening euro zone debt crisis poses a huge threat to the British economy, but that there wasn’t enough reason to implement another round of easing just yet. The minutes also showed that the policymakers expect inflation to fall below the central bank’s 2% target next year.
BBA mortgage approvals came in better than expected at 35.3K, higher than the estimated 32.3K increase and the previous month’s 33.5K figure. In fact, the October report showed that mortgage approvals are at their highest levels since May last year.
However, these upbeat reports weren’t enough to boost the pound in yesterday’s trading as news of the German bond auctions took the spotlight. You should definitely drop by my euro zone economic commentary to get the scoop on that!
The U.K. is set to release its revised GDP figure for the third quarter of this year, and there are no revisions expected for the 0.5% growth figure. Watch out for the actual release at 9:30 am GMT because a significant upward revision could give the pound the boost it needs. Also keep an eye out for the business investment report, which could show a 0.5% drop in investment for Q3 2011.
Later on, at 12:00 pm GMT, the U.K. will report its CB industrial order expectations for this month. The index is expected to dip from -18 to -19, reflecting lower volume expectations. A higher than expected figure could be positive for the pound while a weaker reading could force pound pairs to extend their losses.