With risk appetite back up, the pound was able to overcome weak sales data and dovish words from central bank officials to end the day higher against its safe haven counterparts. Cable finished 25 pips higher at 1.5504 while Guppy rose 81 pips to close at 120.87.
Phew! The pound sure is lucky that traders were in a risk-taking mood yesterday! It could’ve ended the day much, much lower considering the feedback we got on the economy. First off, the CBI realized sales index dropped from -11 to -19 this month. Not only is that figure far worse than the -12 that economists had predicted, but it also marks the index’s biggest drop in two years!
Sadly, retailers are expecting gloomy days ahead, even with the holidays just around the corner. Word on the street is that they believe spending will decline another 6% next month! What a bummer!
After that downbeat report was released, some BOE officials added to the pessimism, saying that we’ll likely see flat growth in the coming months and that the central bank has good reason to ease its monetary policyfurther. Hmm… I’m beginning to think that the BOE may add more stimulus as soon as next month!
Today at 7:00 am GMT, we’ll begin the day with the Nationwide HPI report, which is due to show a 0.1% decline in house prices after it printed a 0.4% increase last month. After that, we’ll take a look at net lending to individuals data, which is expected to stay flat at 1.0 billion GBP. Last but not least, we’ll have the autumn forecast statement on tap at 12:00 pm GMT. Should these reports print more negative feedback on the U.K. economy, the pound could end up taking a hit!