Daily Economic Commentary: United Kingdom

Trading Discussion News and Economy
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Thanks to the positive results of economic data released yesterday, the pound was able to take back the ground it lost against the dollar during the Asian trading session. The GBPUSD ended the day at 1.5273.

The Halifax house price index, which measures the monthly average change in price of selling homes financed by the Halifax Bank of Scotland, showed an unexpected increase of 1.1% in March, almost double the forecast.

The manufacturing production report released soon after was also able to beat expectations. It revealed that production in March surged by 1.3%, opposite the 1.0% decrease in February and higher than the 0.7% rise initially predicted.

The slightly dovish tone of the BOE interest rate decision put a cap on the pound’s rally though. The Bank of England said in its statement yesterday that they decided to keep rates on hold at 0.50% and maintain its 200 billion GBP quantiative easing program because the British economy is still “vulnerable.” The bank’s statement gave traders reason to believe that interest rate hikes probably won’t occur until next.

The important data to watch out for today is UK’s producer price index at 8:30 am GMT. The PPI measures the change in price of raw materials bought by manufacturers from their suppliers. The PPI is generally used by traders as a leading indicator of inflation, because businesses tend to pass on additional costs they incur to their customers. The forecast is for another increase in March, this time by 1.3%.

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The pound rallied nicely last Friday, as GBP bulls reacted favorably to the risk appetite soup that was served. With the GBPUSD gapping up over the weekend to open above key resistance at 1.5400, will the pair continue to surge higher?

A report released last Friday showed that producer prices rose by 3.6%, beating consensus of a rise of just 1.3%. Remember, rising producer prices could signal rising inflation, as companies normally like to pass additional costs over to their customers. Also, take note that rising inflation would signal to the BOE that they might need to ease off on their quantitative easing measures, such as having low interest rates.

What boosted risk appetite however, was news over the weekend that the EU was giving Greece a bailout package, after Fitch had downgraded their debt to BBB-. I’m going to be monitoring this and I’ll keep you posted on any developments on this, as it will have a significant impact on risk sentiment.

Looking ahead at the [=&currency[]=AUD&currency[]=CAD&currency[]=CHF&currency[]=EUR&currency[]=GBP&currency[]=JPY&currency[]=NZD&currency[]=USD&importance[]=&importance[]=3&importance[]=2&importance[]=1&submit=Submit"]economic calender](Forex Economic Calendar[), it looks like we’ve got nothing coming out today, so I suggest you take note of reports and news (ahem, GREECE!) coming out from other countries today.

Things will begin to heat up tomorrow, as the BRC retail sales and RICS housing price balance reports due tomorrow at 11:00 pm GMT. Last month, members of the British Retail Consortium revealed that retail sales rose by 2.2%. Meanwhile, only 1.7% of property surveyors are expected to report that housing prices rose last March, a major drop from February’s figure of 17%. If these reports come in worse than expected, we may see the GBPUSD dip to fill up the gap it formed over the weekend.

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After taking a huge leap during the weekend, the pound slid back down against the greenback and the yen in yesterday’s trading. Weak economic data, along with the uncertainty surrounding next month’s elections, weighed on the pound.

The RICS house price balance for March showed that less surveyors are reporting house price increases in their area. The consensus was that 18% of surveyors would post house price gains for March, same as in February. However, the actual figure came short and landed at 9% only.

Furthermore, many are starting to worry that asset prices could continue to fall if the upcoming elections result in a hung parliament, wherein no political party holds majority of the seats in parliament. Such political stalemate could also delay the implementation of laws designed to trim the UK’s bulging deficit.

On a more upbeat note, the BRC retail sales monitor printed a 4.4% year-over-year increase in March, twice as much as the 2.2% annual retail sales growth seen in February. Components of the report showed that the additional spending, particularly on food, during the Easter holidays was a key factor in boosting sales. However, this strong report was unable to provide support for the pound.

UK trade balance figures are on tap for today. Their trade deficit is expected to narrow from 8.0 billion GBP to 7.3 billion GBP in February. Judging from the considerable improvements in industrial production and manufacturing activity for the month, we might be in for an upside surprise come 8:30 am GMT.

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The GBP closed in a mixed fashion yesterday. The Cable (GBPUSD) fell to and closed at 1.5364 from 1.5372. The Guppy (GBPJPY), in a similar way, also slipped slightly to close at 143.14 from 143.34.

The UK’s trade balance in February unexpectedly improved to -£6.2 billion from -£8.1 billion. Initially, the country’s trade deficit was only seen to narrow to -£7.3 billion. The surprise result then gave traders a reason to buy up the GBP after when the number was released. The pound, however, continued to range until the end of the day.

Later today (11:01 pm GMT), the UK’s nationwide consumer confidence index will be on tap. The index likely reached 81 during the recent month, from it’s previous reading of 80. Confidence in the UK has been faring better as of late given the positive developments in its economy. A gain in this account, especially if the number comes in better than expected, could give the GBP some support.

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Thanks to the slight case of risk appetite, yesterday’s trading session turned out to be a great one for the pound. The GBPUSD and GBPJPY closed out the US trading session with significant gains, ending at 1.5372 and 144.68 respectively.

Earlier today, the Nationwide’s consumer confidence survey for March came out. It printed a reading of 72, lower than both the forecast and the previous month’s reading. This indicates that consumers became less optimistic about UK’s economic conditions, which could put some downward pressure on consumer spending in the long run.

No more important economic data set for release from the UK for the rest of the day so the pound’s price action would probably be dictated by news coming out of the US.

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Despite some strong moves by the dollar, the pound amazingly posted some gains versus the greenback. The GBPUSD pair closed trading just under the 1.5500 handle. Is the pound for real? Or was it just a lucky day?

With a pullback on risk appetite yesterday, it was quite amazing to see the pound hold on to its gains versus the dollar, even as no economic data was released. Still, that could all change today, as we’ve got some political debates on the tube.

The reason why this is important is because there is a lot of uncertainty as to which party the British public is leaning more towards. Is it the Conservatives? Or is it the Labour party? Without getting into the nitty gritty of what these two political blocs stand for, the reason why analysts and traders are concerned about the outcome of the elections is because there is chance that it may end in a “hung parliament”.

A hung parliament is a scenario where there is no majority or ruling party.

With no majority party in parliament, this could delay any concrete plans towards reducing the UK’s debt. It’ll be interesting to see who comes out ahead in the debates and how the British public reacts to them. In any case, be sure to be mark this down on your schedule and watch out!

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Another huge gap to start the week? Unlike last week, when the pound enjoyed an upward gap during the weekend, pound pairs saw a downward gap this time around.

The reason why the pound started off on such a sour note is probably the ongoing political fears in the UK. The latest elections survey showed that the lead between the Conservatives and the Labor Party narrowed from 9% to 6%, increasing the likelihood for a hung parliament, wherein no political party holds majority of the seats in parliament. If both parties have different opinions on how to tackle UK’s economic problems, the British government could find it more difficult to find and implement solutions to these.

Aside from that, news of the SEC’s fraud accusation to Goldman Sachs spurred risk aversion and pumped up demand for safe-haven assets.

On the economic front, the freshly released Rightmove HPI report showed that asking prices for homes climbed by 2.6% in April after posting a mere 0.1% uptick in March. According to Rightmove, the rise in house prices was a result of the strong demand for homes during the month.

Tomorrow, the UK is set to release its inflation reports at 8:30 am GMT. Its CPI is expected to climb by 3.2% year-over-year in March while its core CPI could post an annualized 2.8% increase. Hmm, it seems like inflation has already picked up for the UK economy… Could this mean that the BOE would consider ending its quantitative easing programs soon?

Minutes of the BOE’s latest monetary policy meeting are due Wednesday. Would the BOE policymakers still be unanimous with their decision to keep their asset purchase program unchanged? Stay tuned at 8:30 am GMT to find out. Also due Wednesday is UK’s claimant count change, which could show a 5.7K decrease in the number of people claiming unemployment benefits for March.

On Thursday, UK will release its public sector net borrowing report, retail sales, preliminary mortgage approvals, and CBI industrial order expectations reports. Whew, that’s a lot for a day! Public sector net borrowing is expected to climb from 12.4 billion GBP to 24.2 billion GBP in March while retail sales are estimated to post a 0.7% uptick. Mortgage approvals and industrial order expectations are also gunning for improvements for the month.

Last but not the least, on Friday, the UK will release its preliminary GDP report for the first quarter of 2010. Another 0.4% expansion is expected for the quarter and a better than expected figure could provide support for the pound.

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After dipping sharply during the Asian and European sessions, the pound made a V-turn to recover most of its losses against the dollar and the yen. The GBPUSD rose to and closed at 1.5339 after reaching a low of 1.5192 from 1.5363. Similarly, the GBPJPY reached and settled at 141.72 after touching a low of 139.39 from 140.66.

No economic reports came out of the United Kingdom yesterday. Selling pressure, however, was felt by the pound as the issue regarding Goldman Sachs’ fraud still lingered in the mind of the market. The pound then reversed its course sharply when the fraud charges that was pressed on the company only secured a 3-2 vote, suggesting that the case against it was not founded strongly.

The UK’s March CPI and RPI are due today at 8:30 am GMT. The UK’s headline inflation number is seen at 3.2% on a year-over-year basis in March while the country’s retail price index or RPI likely reached 4.1% from 3.7% during the same period. An increase in these accounts could mean that business activity in the UK had improved. Such, therefore, could be bullish for the GBP.

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Yesterday turned out to be a magnificent one for the pound, as it was able to post some gains against both the dollar and the yen. The Cable ended the day at 1.5363, while the Guppy closed out the day at 143.19.

The pound’s appreciation yesterday was mostly caused by the better-than-expected data that came out of UK. The country’s consumer price index, which was initially predicted to reveal an increase of 3.2% in prices for the month of March, showed a 3.4% climb instead. Meanwhile, the core version, which excludes the prices of volatile items such as food, booze and energy items, reported a 3.0% rise.

I find it quite odd for currency traders to buy up the pound on the data. Normally, it is said that the inflation rate and unemployment rate are inversely related. This means that inflation rates are usually during times of low unemployment. Conversely, a period of high unemployment is accompanied by low inflation. In due time, the rising prices of goods and services will overwhelm job creation and put some serious downward pressure on UK’s growth. The pound could experience a serious beating once this sinks into the mind of currency traders… Stagflation, anyone?

For today, watch out for data concerning UK’s labor market and the Bank of England’s meeting minutes at 4:30 pm GMT.

The labor market report is expected to show that employee weekly earnings including bonuses grew 2.4% and that the country’s unemployment rate remained at 7.8% in February. Meanwhile, the number of people who filed a claim for unemployment insurance is predicted to have fallen by 10,000 in March. If the actual reduction comes in larger than consensus later, we could see the pound be bought up again.

As for the BOE meeting minutes, it is widely expected that all of the nine members of the Monetary Policy Committee voted to keep rates unchanged at 0.50%. Given this, the breakdown of the MPC’s interest rate votes probably wouldn’t garner much attention. Traders would most likely focus on the BOE’s outlook and assessment on UK’s economy.

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Another wonderful day for those pound bulls, as the GBP posted some gains against both the dollar and the euro. Cable closed almost 40 pips higher to end at 1.5409, while the EURGBP closed below last week’s low, finishing at 0.8696.

Yesterday, we got a bag of mixed labor market data. First the bad news – the unemployment rate rose higher than anticipated, rising to 8.0%, after forecasts were for the rate to remain steady at 7.8%. This marked its highest level in 16 years!!! As long as unemployment woes remain a tough nut to crack, it will be difficult for the UK economy to get back on track (ha – I just rhymed!).

The good news though, was that the number of people who filed for unemployment benefits fell by 32,900, beating consensus of a drop of just 10,000. It looks as if traders saw this as encouraging news, as the pound was bought up immediately after the release of the data.

In other news, the Bank of England decided to keep its asset purchase program at its current level of 200 billion pounds. BOE Governor Mervyn King pointed that the UK hadn’t really shown any signs of strength in the past month to alter the MPC’s view on the economy.

The committee though, is concerned about the prospect of rising inflation. Recent inflation data has shown that inflation has exceeded the BOE’s target of 2.0%. If this keeps up, it may force the BOE to withdraw its quantitative easing measures and to raise interest rates, even if the economy is still unstable.

We could be in for more swashbuckling action today, as we’ve got some red flags going up on the economic pole today at 8:30 am GMT. Monthly retail sales data are expected to reveal that sales rose by 0.7% in the previous month. This account has caused some strong moves in the past, so watch out if the figures come in worse than expected – it could trigger wide spread pound selling.

Mortgage approvals are seen to have risen to 51,000 in the past month, up from 48,000 in February. This would be an sigh of relief for the housing market, as mortgage approvals have failed to hit their targets the past 3 months running.

Also due are public sector net borrowing figures. Consensus is that the government overspent its budget by 24.1 billion pounds last March, up from the 12.4 billion deficit in February. If the deficit comes in much larger than anticipated, could this trigger more concerns about the government’s debt problems?

Speaking of the government…

The second episode of a series of political debates will be on air today. Current polls have shown that the incumbent Labour party, led by Prime Minister Gordon Brown, have been losing more and more support David Cameron’s Conservative party. This is a cause of concern, as this could lead to a hung parliament come election time next month. Remember, a hung parliament is a situation where no political party has majority power, which would make the passing of laws on critical issues (ahem, DEBT!) hard to pass.

Phew! That was a long one! To recap – we got mixed data from labor market yesterday, but the pound still remained up. Today, we’ve got public finance figures, mortgage approvals and retail sales data, but we should all turn on the tube and keep an eye out on those political debates!

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Oh bugger! The cable was unable to hold on to its recent gains as it slid back below the 1.5400 handle yesterday. The guppy was a bit more fortunate since it kept within its range after hitting a high of 144.19.

Weak economic reports were most likely the reasons why the pound held back from rallying during yesterday’s trading sessions. March retail sales only saw a 0.4% uptick instead of the projected 0.7% growth. This was also much lower than the upwardly revised 2.5% increase in retail sales for February, reflecting how consumers toned down their spending.

Another disappointing piece of economic data was the CBI industrial orders reading for April, which fell short of expectations. The index was expected to climb from -37 to -32 this month but instead climbed one notch higher to -36 only. Since the reading is still in the negative zone, it implies that manufacturers are expecting decreasing order volumes in the next three months.

Also released yesterday was the UK public sector net borrowing report which shows the difference between the government’s spending and borrowing. Net borrowing stood at 23.5 billion GBP in March, more than twice as much as the 9.7 billion GBP net borrowing for the previous month. In fact, this March deficit is the largest since 1993! This brought the UK’s annual budget deficit to 152.8 billion GBP, its highest level since World War II! Uh oh, this swelling deficit can’t be too good for the UK and the pound…

Add to that the ongoing political concerns and fears of a hung parliament after their general elections in May. If no political party holds majority of the seats in parliament, it could be tougher for them to agree on how to solve UK’s debt problems.

On a more upbeat note, mortgage approvals in the UK reportedly rose to 52,000 in March, a nice rebound over the 48,000 figure seen in February. The negative effect of the severe cold weather on the housing market seems to have faded during the month. Aside from that, the UK government removed the tax for first-time home buyers, stoking demand for new house purchases.

Today is a big day for the UK since it is set to release its preliminary GDP reading for the first quarter of 2010. Their economy is slated to print another 0.4% economic expansion for the quarter and steer clear of recessionary waters. But would the UK be able to pull it off? Our resident economic guru has an interesting take on the UK’s upcoming GDP report in his recent entry so I suggest you read up!

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The pound closed mixed in last Friday’s trading session. The GBPUSD dipped slightly to 1.5379 from 1.5386. The GBPJPY, on the other hand, rose to 144.60 from 144.02.

The UK’s first quarter GDP growth was at 0.2% which was weaker than the projected 0.4% expansion. The adverse winter condition that the country experienced during the period slowed down the business activity in the region. The previous quarter’s growth, however, was upped to 0.4% from 0.1%. Still, the less-than-stellar 1Q GDP figure weighed on the GBP.

The UK’s CBI realized sales will be on deck on Tuesday. The index is seen to improve to 16 from 13 in April. The BBA mortgage approvals for the month of March, which is projected to be at 39,300, will also be on tap during that day.

On Thursday, the country’s Nationwide HPI and the result of the GfK consumer confidence survey in April will be released. The selling prices of homes which are backed by Nationwide are expected to rise again by 0.4% on top of the 0.7% gain that it had during the month prior. Consumer confidence, on the one hand, likely inched higher to -14 from -15. An increase in the HPI and an improvement in the consumer confidence index could give the pound some short term support.

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Despite the lack of any new economic developments, the GBPUSD was able to slowly creep up above the 1.5400 handle yesterday. The pair ended the US trading session at 1.5457, around 80 pips higher from its opening price during the Asian trading session.

For today, there are two important events of interest on UK’s economic calendar.

First up, at 8:30 am GMT, the British Bankers’ Association will release its mortgage approvals report for the month of March. It is expected to show that the number of mortgages approved for the month grew to 38,500 from 35,276 in February. Since the BBA issues more than half the mortgages in the entire UK, a rising mortgage approval report is usually considered positive for the country’s economy; because it means that more and more people are becoming financially capable of purchasing a house.

Following shortly at 10:00 am GMT, UK’s CBI distributive trades survey is due. The distribute trades survey is designed to see whether retailers and wholesalers think that sales volume is rising or not. A reading above baseline zero means sales are increasing while a reading below zero indicates otherwise. It is expected to print a reading of 16 for this month, up the February’s reading of 13.

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Good grief! It looks like politics is dominating the news in the UK, as the results of some recent polls suggested that the UK could indeed be heading towards a hung parliament. And what effect did this have on the pound? Well, the GBPUSD pair dropped over 200 pips from its opening price!

Recent polls have suggested that no political party will come out ahead in the upcoming elections, raising concerns that this could end with the government having a hung parliament. As I’ve said time and again, a hung parliament is a situation whether no political party has a majority power in the government. The reason why this spooks the financial markets is because it could delay any legislation that could be passed. More specifically, it could hamper any efforts towards solving the UK’s debt problems if the parties can’t get along.

In other news, economic data that was released were also weak, as the BBA mortgage approvals and CBI distributive trades survey reports posted disappointing results. Mortgages approvals in March came in at 34,900 after consensus was at 38,000. Moreover, the previous month’s figures were revised down from 35,300 to 33,400! More problems in the housing market eh?

Meanwhile, the CBI report just matched the previous month’s score of 13, after it was expected that it would rise to 16. This indicates that retailers and wholesalers confidence towards future sales remains stable and hasn’t increased.

It looks like the economic calendar is empty today, but I suggest you keep an ear out for any rumblings coming out of the political arena. If more news comes out suggesting that the UK is headed towards a hung parliament, we could see the GBPUSD drop to test its yearly lows.

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Another day of losses, argh! The pound can’t seem to catch a break this week as it kept sliding down against the greenback. Rumors that a UK debt saga could be in the works caused the pound to lose its appeal.

Word on the street is that the credit rating agencies would start reviewing the UK’s finances right after the elections next week. The UK’s fragile fiscal standing has been hurting the pound recently and a fresh set of downgrades could clobber the pound pairs even more. On top of that, fears of a hung parliament could continue to weigh the pound down until the elections are over. Even then, if the results indeed show that no party holds majority of the seats in parliament, who knows how low the pound could go?

Yesterday’s lack of UK economic data was probably the reasons why the pound was left vulnerable to the ongoing problems in the UK. Today could be a different story. The UK is set to release its Nationwide HPI report at 6:00 am GMT and it could print a 0.4% uptick in house prices for April. Also due today is the GfK consumer confidence reading for April, which could climb a notch from -15 to -14, indicating that consumers are less pessimistic during the month. Better than expected figures could allow the pound to catch its breath from its dive.

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The pound booked a nice win over the yen and greenback in yesterday’s trading. The cable (GBPUSD) rose to and closed at 1.5323 from 1.5190. The guppy (GBPJPY) also climbed to 144.15 from 142.96.

The UK’s Nationwide HPI rose by 1.0% in April. The previous month’s gain was also revised upward to 1.0% from 0.7%. The account, by the way, measures the change in the prices of homes with mortgages that are backed by the Nationwide Building Society. Increasing home prices usually reflects well on the economy and the pound since it suggests that the demand for homes is rising as well.

The result of the GfK consumer confidence survey for the month of April was also published. The survey shows that confidence, as measured in the index, has dipped to -16 in the month from -15. A decline in the confidence index is usually bearish for the pound. The result, however, did not have much negative impact on the pound’s short term valuation.

The UK’s economic calendar is report-free today. The pound, however, could still experience some volatility with the release of Canada’s and the US’s GDP reports. Strong growth figures from the two countries could spark some risk taking, benefiting the anti-dollars like the GBP.

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The UK elections has been a trending topic for the past weeks and now, the day of reckoning is finally near! Fears of a hung parliament have been weighing the pound down but will it be able to breathe a sigh of relief this week?

No economic reports were released from the UK last Friday, leaving the pound more attuned to developments in the political arena. Based on the recent poll results, the Conservative party widened their lead against the Labor party and the Democrats by a few more points. This allowed the pound to rally against both the greenback and the yen as the possibility of a hung parliament, wherein no party holds majority of the seats, became less likely. Well, nothing’s written in stone yet and we’ll just have to wait for the actual election results after May 6.

On the economic front, it seems like this week will be a busy one for the UK. Even though UK banks are on a holiday today and no economic reports are due, a bunch of top-tier releases are on Tuesday’s docket. There’s the Halifax house price index, which could show a 0.6% increase in home prices for April. Also due on Tuesday is the manufacturing PMI, which could step up a few notches from 57.2 to 57.5, reflecting an expansion in the industry. Later on, the UK will release its consumer confidence report, which could show that sentiment improved from 72 to 80 in April.

On Wednesday, the construction PMI will be released. This report could show that the industry expanded again in April as the index could climb from 53.1 to 53.5.

Come Thursday, the UK parliamentary elections, the main event everyone’s been buzzing about recently, will be held. Will fears of a hung parliament be realized? If so, the pound could stand to lose more ground even though this possibility has been priced in lately. This event could take the attention away from the services PMI due 8:30 am Thursday, which could also post an improvement just like the manufacturing PMI and construction PMI.

Lastly, on Friday, the UK will release its PPI readings. Producer input prices are expected to climb by 1.0% in March while output prices could post a 0.6% uptick. Both are leading indicators of consumer inflation and better than expected results could provide support for the pound.

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After falling sharply early in Asia, the lack of economic flows kept the GBPUSD mostly in range all throughout the European and US trading session yesterday. The pair ended the day hardly changed at 1.5243, just roughly 50 pips lower from its week open price.

Be on the lookout for a potential break during the European trading session today folks. Remember, the longer price consolidates, the more intense the breakout becomes. And what better way to trigger a break out than through an economic report?

Later, at 8:30 am GMT, UK’s manufacturing purchasing managers’ index will be released. It is predicted to show a reading of 57.5 in April, slightly higher than the 57.2 reading from the month before. Now, if the actual figure comes higher, we could see the GBPUSD bust through the US session highs. On the other hand, if the actual figure comes in worse-than-expected, a break of yesterday’s low around the 1.5200-1.5210 region is likely.

The consumer credit report for March, which will be released at the same time as the manufacturing PMI, could also serve as a breakout catalyst in the event that it comes out off target. The report is expected to show that loans issued to consumers rose by another 500 billion GBP after rising by the same amount the month prior.

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Oh blimey! Thanks to renewed risk aversion, dollar strength reigned supreme, dragging the pound lower despite the release of some good data. The GBPUSD dropped almost 100 pips from its opening price. With elections just around the corner, what could be in store for us today?

The good news that I am talking about is the manufacturing purchasing managers’ index, which came in to beat consensus by printing a score of 58.0, after it was projected to have a reading of 57.5. This marked the highest score since the beginning of the recession.

Apparently, the recent depreciation of the pound has helped spur exportdemand. Remember, a cheaper currency helps stimulate export demand because it in effect makes a country’s goods cheaper relative to goods from other countries. Hmmm… it looks like the BOE’s master plan is starting to work.

In other news, loans issued to consumers rose by just 300 billion GBP, failing to hit initial estimates of a rise of 500 billion GBP. Is this a sign that credit is still hard to come by? I’m going to be keeping an eye out on this situation. If there are more signs that credit conditions are still weak in the UK, it may give the BOEeven more reason to keep rates at current levels.

For today, the only report of mild interest that is coming out is the construction PMI report. The index, which surveys managers of construction companies on their thoughts of the economy, is expected to post a reading of 53.4, up from 53.1 the previous month. Seeing as how the manufacturing PMI report came in stronger than expected, could we expect the same in today’s report?

Still, I’m not too sure whether traders will really be paying attention to this report. I have a feeling that everyone is gearing up for the upcoming elections. The UK public will be voting on May 6 and given the results of recent polls, a hung parliament is certainly in play. I’ll keep you posted on these developments once the Queen gives me a ring and gives me the heads up on what’s happening over in London.

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Today is a big day for the pound since the UK will be holding their parliamentary elections. Would fears of a hung parliament be realized? Or will the Conservative party take the lead and provide the pound some relief?

As risk aversion continued to dominate, the pound chalked up another string of losses against the greenback and the yen but managed to score a bunch of gains against the euro. Well, the euro zone has an overwhelming amount of debt problems to deal with so it’s understandable why traders decided to sell the euro in exchange for the more stable pound. But bear in mind that the UK is worried about its own deficit too and, if the upcoming elections result in a hung parliament, the British government might have a tougher time dealing with debt.

Only one economic report is due from the UK today is their services PMI. The reading for the month of April is expected to climb from 56.5 to 57.1, reflecting a stronger expansion in the services industry. Watch out for the actual figure which will be released at 8:30 am GMT.