Daily Economic Commentary: United Kingdom

Trading Discussion News and Economy
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Increased interest rate hike expectation – that’s what lifted Cable yesterday! If you hadn’t noticed, GBP/USD was able to stage a solid rally yesterday, reaching its highest level in three weeks at 1.6274 before retracing some of its gains to end the day with a 78 pip win at 1.6208.

The BOE’s meeting minutes released yesterday showed that Spencer Dale joined Andrew Sentance and Martin Weale in voting for an interest rate hike. It seems that the case for tightening monetary has gotten stronger as U.K.’s inflation hits almost double the BOE’s inflation target. The market expects that the BOE will increase interest rates by 25 basis points to 0.75% in its May meeting. Needless to say, the contents of the minutes were very bullish for the pound.

There aren’t any high-profile economic reports from U.K. today, but we will be seeing the country’s distributive trades survey. Due to come out at 11:00 am GMT, the survey is expected to print a reading of 30 for February, down the 37 figure seen the month before.

With the market’s attention focused on interest rate hikes, the upcoming survey probably won’t have a strong effect on the pound. Even so, I’d watch how the pound reacts to the survey… You never know how these things [B]REALLY[/B] turn out!

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Boomshakalaka! Was the pound playing NBA Jam? Cause it got dunked on all over the place in yesterday’s trading! The pound was the weakest across the board, with GBP/USD losing 70 pips to end at 1.6138, while GBP/JPY fell a whopping 161 pips to close at 132.11.

The pound’s demise was somewhat surprising, as there wasn’t any real hardcore reason why the pound dropped so much.

Yes, the distributive trades survey was disappointing, printing a score of 6 after expectations were for a reading of 30. This indicates that spending may die down in the coming months. Still, looking at the charts, the markets didn’t react too much after the release of the report. In addition, this report has never really been a high impact report, so I doubt this was the main reason why traders decided to dump the pound.

Perhaps traders were just being a little cautious and decided to take some profits. Yes, another MPC member did vote for a rate hike, but there are others, like Miles, who seem strongly opposed to a rate hike. For the mean time, watch out for more comments from other members, as it could signal which way they are leaning in terms of interest rates. And with the markets being so fickly right now, it might be best to just chill out and have some tea.

Earlier today, the GFK consumer confidence report was released, coming in at -28, just off the -27 expectation. This indicates that consumer confidence is still poor and that spending might stay at low levels in the coming months.

Looking ahead, we’ve got the revised GDP q/q report coming in at 9:30 am GMT. No changes are expected from the previous report, which showed that the U.K. economy contracted by 0.5% last quarter. Now, if we see a revision to the downside, it might just send the pound drowning in the English channel.

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After reaching an intraday high of 1.6161, the pound lost the upperhand to the dollar and hit rock-bottom at 1.6031. Ouch! It then traded higher but there weren’t enough good vibes to fuel the bulls. The pair ended Friday’s trading 23 pips lower from its opening price at 1.6115.

So what cost the pound its win?

I have a feeling the double whammy of worse-than-expected economic reports last Friday had a lot to do with it. Darn!

According to the revised GDP report for the fourth quarter of 2010, the economy actually contracted by 0.6%, not only by 0.5% which was initially reported. This might have caught a few traders off-guard since analysts had predicted no revisions from preliminary report.

Adding more insult to injury was the preliminary business investment report for the same quarter. The report printed a 2.5% decline in investments made by businesses and the government and was more than the 0.3% contraction that the market was bracing for. Yikes!

We don’t have anything from the U.K. today, but we’re in for a treat tomorrow with the lineup of tier one reports we have on tap!

Nationwide will release HPI at 7:00 am GMT and analysts are expecting house prices to have declined further by 0.2% in February, after contracting by 0.1% in January. Halifax will also deliver its own report at 8:00 am GMT sometime between tomorrow and Friday and the forecast is for a 0.6% decline in house prices.

Then at 9:30 am GMT we’ll have the manufacturing PMI for February which is expected to come in at 61.5.

See if these reports will bring good news to the pound bulls. Remember that although hawks are growing in number in the BOE hood, evidence of weak economic growth could keep BOE Governor Mervyn King from hollering an interest rate hike in fear that it could send the U.K. into another recession.

Talking about the BOE, take note that our central bank chaps will also give the lowdown on inflation to the British Parliament tomorrow at bank’s inflation report hearings to the parliament at 10:00 am GMT. See if the recent surge in oil prices will make the BOE utter hawkish comments as this may probably spur the pound into a rally.

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And the award goes to…. the pound! Even with little economic data released from the U.K. yesterday, the sterling was one of the strongest performers in the charts. For one, GBP/USD climbed the pip stages by 152 pips to 1.6256, while GPB/JPY also ascended by 135 pips to 132.98.

Aside from an improvement in risk appetite, it seemed that pound bulls are getting excited about the U.K.’s inflation. You see, though oil prices have stopped rocketing in markets, commodity prices can still put heavy inflationary pressures on the economy, and motivate the BOE to raise interest rates earlier than planned.

We’ll see if the bulls will have more reason to party in the pip streets today when the U.K.’s manufacturing PMI is released at 9:30 am GMT together with the consumer credit and mortgage approval reports.

Meanwhile, the Nationwide house prices data will be printed at 7:00 am GMT. These reports might not be as heavy-hitting as the interest rate decisions, but they can also give a feel of the direction of economic recovery! Keep your eyes peeled, will ya?

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With positive data and risk appetite backing it up, the pound transformed to a spankin’, hot-off-the-press iPound 2. Ha! GBP/USD skyrocketed to its closing price of 1.6328 after it bottomed at 1.6216.

Yesterday we saw the construction PMI report for February print its highest reading since June 2010 at 56.5 after coming in at 53.0 in January. I bet this got bulls as giddy as Apple fanboys when the details of iPad 2 was released yesterday. I mean who wouldn’t be? It could be a signal that the U.K.’s struggling housing sector is finally getting back on track!

Let’s see if the pound can extend its gains against its counterparts with the January services PMI report due later at 9:30 am GMT. It is eyed at 53.8 so watch out for a better-than-expected figure as this would probably spur bulls into another pip-frenzy!

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Unlike Charlie Sheen’s Twitter account that is still gaining fans by the minute, the pound seems to have lost its appeal in markets. You see, though GBP/JPY gained 29 pips at 134.00, GBP/USD also ended the day 59 pips lower than its 1.6328 open price. I guess the pound just doesn’t have the tigerblood, eh?

The services PMI report might have something to do with the bulls’ loss of interest when it only clocked in at 52.6. This is not only the worse than its January figure, but is also first disappointing report for the U.K. this week.

Good thing that the BOE still has another card in its bag of tricks! Speculations of an interest rate hike from the BOE has been supporting the Sterling for the past couple of days, and with the euro zone’s ECB being as subtle as a battering ram about the possibility of a rate hike, it’s only a matter of time before the BOE follows suit.

We only have the U.K.’s Halifax HPI due today at 8:00 am GMT, but that doesn’t mean that we should pack our weekend bags early! The big NFP report from the U.S. will also be released today, and its volatility might send your trades on a wild ride!

Be careful on your trades today, kids!

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The pound gave an inch to its major counterparts last Friday when a worse-than-expected report supported the risk aversion in markets. GBP/USD closed only 2 pips higher at 1.6271, while EUR/GBP climbed by 16 pips to .8596. Meanwhile, GBP/JPY dropped from its intraday high of 135.21 and closed at 133.93.

Oil prices were still the talk of the town when it finally tipped to $104 per barrel last Friday. This got a few traders wondering if the Bank of England will have to increase interest rates as early as this week to curb surging inflationary pressures. While the possibility of an interest rate hike is usually a boon for currency bulls, the urgency of a rate hike in the U.K.’s case is making other traders jittery. Heck, its inflation rate already reached 4.0% in January – twice the BOE’s target!

Of course, it also didn’t help that the U.K.’s Halifax house prices disappointed markets last Friday when it showed a 0.9% slide in February after printing a 0.8% gain in January. Since the housing market is one of the biggest headaches of the U.K. economy, the weaker-than-expected report convinced many pound bulls to close shop early for the weekend.

No report will be released from the U.K. today, but a few big hitters are expected to hit the markets within the week. Among them are the trade balance report on Wednesday at 9:30 am GMT, the manufacturing figures on Thursday at 9:30 am GMT, and the big MPC interest rate decision also on Thursday at 12:00 pm GMT.

Stay sharp on your fundamental analysis this week!

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What a surprising turn of events! Just when you thought Cable has set its eyes on new yearly highs, it does the opposite and dips below 1.6200. At the end of the U.S. trading session, Cable was sitting at 1.6202, almost 150 pips lower from its highest level that day.

The Cable slid mainly because of the announcement that Ben Broadbent, an economist from Goldman Sachs, will replace Andrew Sentance on the MPC. If you’ve been following my daily roundups, you’d know that Sentance has been considered as the most hawkish member among the Bank of England Monetary Policy Committee (MPC) and has been firmly calling for a 25 basis point rate hike since June 2010. With one less hawk on the MPC, it only follows that the possibility of a future interest rate hike dwindles as well.

Economic data proved to be Cable-negative too. Earlier today, the BRC Retail Sales monitor showed a decrease of 0.4% in February, opposite the 2.3% gain seen the month before. At the same time, the RICS house price balance dropped 26%, slightly worse than the 25% fall initially expected.

No economic reports for the rest of the day for U.K. so we could see the MPC member replacement continue to weigh down on Cable. Stay sharp kiddos!

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Aww, poor Cable! For the second day in a row, Cable was weighed down by the news that ultra-hawkish MPC Member Andrew Sentance would be replaced by Ben Broadbent. One less hawk means a lower possibility of a rate hike in the future. Cable ended the U.S. trading session at 1.6157, a 45 pip decline from its opening price during the Asian session.

The only piece of data on U.K.’s economic calendar today is the country’s trade balance. Scheduled to come out at 9:30 am GMT, the report is expected to show an 8.5 billion GBP deficit for January, lower than the 9.2 billion GBP deficit seen in December.

I don’t suspect the report to have a strong effect on Cable’s price action though as traders will probably simply sit on the sidelines ahead of the BOE’s interest rate decision on Thursday.

Alright! That’s it for U.K.! Good luck kiddos!

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Who’s the biggest loser now? The pound outweighed its major counterparts yesterday when better-than-expected economic reports were released from the U.K. GPB/USD broke its losing streak with a 44-pip gain at 1.6201, GBP/JPY rose by another 41 pips to 133.99, and EUR/GBP fell by another 24 pips to .8579. Boo yeah!

The U.K.’s trade balance report might have started the bulls’ party when it showed only a 7.1 billion GBP deficit in January. This is not only better than December’s 9.7 billion deficit figure, but is also lesser than the expected drop to 8.5 billion GBP deficit.

The BRC’s retail shop index also printed in the green with a 2.7% growth in February after rising by only 2.5% in January. Since consumer spending is one of the biggest headaches of the Bank of England, the improvement was received well by markets.

Let’s see if the pound bulls can extend the party today when the U.K.’s industrial production data is released at 9:30 am GMT. The report showed a 0.1% decline in January, but markets are betting for a 0.8% increase in February. Another big hitter coming the markets’ way is the country’s industrial production report also at 9:30 am GMT.

Of course, the talk of the town will still be the MPC’s interest rate decision today at 12:00 pm GMT. While market geeks aren’t crossing their fingers for an interest rate hike, they’re gonna look closely at the hawks’ camp to see if they manage to get another bro on their campaign for an interest rate hike.

Don’t miss these big reports, kiddos!

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Party’s over, folks! The bulls’ celebration was cut short yesterday as upbeat economic figures were no match to the BOE’s stubbornness to hike rates. After a brief bounce at the start of the London session, GBP/USD dove head-first to hit 1.6051, locking in a 150-pip slide for the day.

With its better-than-expected numbers, the manufacturing production results made it seem like bulls were about to take over Cable. Production jumped 1.0% in January, a solid rebound from December’s 0.1% slide. The inactivity in December allowed January to post the biggest month-on-month rise in 10 months, but it will be interesting to see if this was just a fluke(anyone remember the winter storms in December?) or if the manufacturing sector can turn this into a trend.

In other news, the Bank of England (BOE) decided to sit on its hands some more and leave interest rates as is in its rate statement yesterday. This didn’t sit well with investors who were hoping that alarmingly high inflation would convince the central bank nerds to finally raise rates.

Dealing another blow to the pound’s armor was news that Moody’s downgraded Spain’s debt rating. Need I remind you of the U.K.’s huge holdings in Spanish banks? Given U.K. banks’ strong ties with Spanish banks, Spain’s problems could easily spill over to the U.K.’s banking industry.

What you ought to keep an eye out for today is the U.K.’s PPI input report. Due at 9:30 pm GMT, this report has the potential to get pound bulls back in the game if it prints a stronger figure than the forecasted 2.4% rise. Rising input costs are the first step to rising consumer prices, and it would give the BOE another reason to reconsider its monetary policies.

Capping off our week at 8:45 pm GMT is BOE Governor Mervyn King himself. Listen closely to what the man has to say because if he maintains his dovish stance, bears may accelerate the pound selloff.

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The pound was able to cross over to the winners’ side of the court last Friday, but it was anything but a star performer! With bad economic data acting like a ball and chain, GBP/USD was only able to rise 33 pips from its opening price of 1.6051.

Last Friday, it was revealed that manufacturers actually didn’t pay as much for their raw materials as most had expected. PPI input only rose 1.1% in February, 0.3% less than consensus. Rate hike-hopefuls were eager to see a strong figure in this report because it would imply strong future consumer inflation. They were probably a bit disappointed to see such a big decline from January’s 2.3% uptick.

Alongside this bit of information, it was discovered that PPI output only rose 0.5% and not 0.7% as forecasts predicted. This just goes to show that manufacturers haven’t been passing on higher costs to their consumers that much.

In other news, BOE Governor Mervyn King warned about growing global imbalances. With such a gloomy view of world demand, King clearly hasn’t changed his cautious outlook for the economy.

For this week, the claimant count change report (due Wednesday at 9:30 am GMT) has the potential to provide a bit of volatility. That being said, it may be worth catching if you’re looking to make quick pips.

In the meantime, catch King again as he speaks today at 2:30 am GMT. We probably won’t hear anything new about the U.K. economy from the BOE top dog, but this speech may be particularly interesting to listen to since he’ll be speaking about financial stability at the Japanese Bankers Association in Tokyo. Maybe he’ll have a few words of advice for Japan, eh?

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Just like [I]Battle: Los Angeles[/I] ruled over the weekend box office charts, the Sterling pounded its major counterparts yesterday despite a few dovish news from the U.K. GBP/JPY ended the day on the green after dropping to an intraday low of 129.65, and GBP/USD climbed to a high of 1.6199 before closing at 1.6173. Meanwhile, EUR/GBP dropped 29 pips from its open price at .8652.

In Bank of England Governor Mervyn King’s speech yesterday, he called for a “grand bargain” that would address trade imbalances in the global economy. He suggested that if these imbalances aren’t dealt with, economic policies around the world will lean towards more import duties or quotas that would protect home industries from competition. This would not only restrict expansion of several industries, but also weigh on political ties between economies.

Much like yesterday, no major economic report is scheduled for release in the U.K. today. But if you want to catch a few pips with the news, then you can watch for the Department for Communities and Local Government’s report on house prices at 9:30 am GMT. The data printed a 3.8% growth in January, but a higher number for February might ease investor concerns on the U.K. housing industry.

At 10:00 am GMT we’ll also get hold of the CB leading index report for February. The index of seven economic indicators rose by 0.7% in January, but the pound might get a lift if the report prints a higher number.

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The U.K. may not have given the markets anything to buzz about, but the pound was anything but quiet on the charts! GBP/USD completely reversed its gains from Monday just as GBP/JPY fell 223 pips to 129.79 on risk aversion and repatriation flows.

News releases were light yesterday, with only tier 2 reports on tap. The Department for Communities and Local Government’s report on house prices showed a 1.4% month-on-month drop in house prices, which translates to a worse-than-expected 0.5% year-on-year gain.

Details of the report say that the housing market isn’t performing evenly throughout the U.K., and that areas that rely on public sector jobs have been getting the short end of the stick. Ouch!

Also, the CB leading index dropped its reading from 0.6% to 0.4% in January, which is definitely not a good sign for the overall economy considering that this report bases its reading on 7 different economic indicators.

In other news, we saw aggressive pound selling as Japan traded in more of its pound holdings for yen in order to deal with the crisis. Risk aversion may have also contributed to the big loss as traders have been moving away from “riskier” assets given recent global developments. Whether this will lead to more losses in the coming days is yet to be seen, but for now, let’s focus on what the U.K. has in store for us today.

On our calendars today, we have BOE Governor Mervyn King due to speak at 7:00 am GMT. I know what you’re thinking… Him again??? This is his third time to talk within a week, so we probably won’t be hearing anything new. But it won’t hurt to listen in. He may just surprise us all with new comments on the BOE’s policy stance.

Then at 9:30 am GMT, we’ll get something a little meatier on our plates. Claimant count data is due and will probably show an increase of 1,200 if forecasts are right. No big surprises are expected this time around since the U.K.’s recovery has been shaky and studies show that there we probably won’t see any big changes in employment… But this only means that unexpected results may catch most traders off guard and cause even bigger waves on the charts, so be sure to tune in later!

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Keep an eye on the sky because the pound is fallin’! A better-than-expected showing from the claimant count report failed to catch the pound’s fall as GBP/USD dropped another 53 pips while GBP/JPY slid another 224 pips during yesterday’s trading.

It looks like everyone guessed wrong! According to last month’s claimant count report, the number of people who claimed unemployment benefits in February declined by 10,200, instead of rising by 1,200 as forecasts had predicted. On top of that, the average earnings index showed a 2.3% rise, meaning our boys up in the U.K. made more dough in the three-month period that ended in January!

No doubt, these employment numbers were an awesome surprise, but they did come with a slight drawback. The unemployment rate actually increased from 7.9% to 8.0%! This probably one of the reasons why the pound couldn’t gain traction and rise up the charts yesterday.

If you take a look at our killer economic calendar, you’ll see we’ve got consumer inflation expectations data comin’ up at 9:30 am GMT. In the previous quarter, the report said that consumers were expecting inflation to clock in at 3.9% over the next year. But as you all know, a lot has happened since then! Commodities have been booming, causing inflationary pressures to build up worldwide. If this affects people’s expectations, we could see the pound erase some of its recent losses.

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Ohhhhhhhh yeah! Give it up for Cable ya’ll! The Cable found itself rallying a solid 110 pips yesterday thanks to reports that Japan was making advances in containing the radiation crisis. Cable was also able to find support on the news that the G7 would hold an emergency conference call to respond to the calamity in Japan.

Earlier today, however, Cable gave up some of its gains as the Nationwide consumer confidence survey failed to meet expectations. It slumped to 38 this month, a solid ten points lower than forecast and the reading seen in February. The survey indicated that consumer confidence had faltered on high inflation expectations and the impending fiscal tightening.

Let’s see if the preliminary report on mortgage approvals due at 9:30 am GMT later will be able to prop up Cable. A total of 47,00 new mortgages are expected to have been approved in February, but a higher number could support bullishness for Cable.

Keep it tight folks!

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Our brothers up in the U.K. may be feelin’ down in the dumps, but the pound was anything but down last Friday! Despite disappointing consumer confidence data, it was able to get ahead of its major counterparts as a risk rally pushed it higher up the charts. Cable rose about 100 pips to 1.6234 while GBP/JPY leaped over 250 pips to finish at 130.86.

According to the latest report, our bros have been hangin’ their heads low in the U.K. The Nationwide consumer confidence index ticked down a whopping 10 points last month, from 48 to 38. Something tells me high oil prices and the VAT increase in January are to blame for the increased pessimism.

Adding to the bad news, preliminary mortgage approvals also failed to meet expectations in February. Approvals only rose 43,000 in February, just under the previous month’s record of 46,000 and the forecast consensus of 47,000.

Looking at this week’s heavy lineup of reports, I daresay the pound may just be the best currency to trade this week!

Tomorrow at 9:30 am, CPI data is due and is expected to show that inflation picked up from 4.0% to 4.2% in the U.K. last month. The BOE has been extremely stubborn in its refusal to raise rates, but you have to wonder how long it can continue sit on its hands if prices continue to trend higher.

Then on Wednesday, we’ve got the MPC meeting minutes on tap. Even though the last meeting had votes split 6-3 in favor of doves, the minutes may provide bulls with a bit of help if it shows that BOE members are becoming more open towards rate hikes.

On Thursday, we’ll cap off the week with retail sales data, which forecasts say will probably show a 0.2% drop following January’s 1.9% rise. Remember, better-than-expected figures in this report tend to be very bullish for the pound!

Phew! Whatta week! Now go out there and make a killing, guys!

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Out of the way, people! We’ve got three white soldiers comin’ our way! The pound seems to be gathering strength and gearing up for a strong bull run. Yesterday, it completed a prefect three white soldiers pattern on the daily chart of GBP/USD! Fueled by risk appetite, the pair marched 75 pips uphill to 1.6310 ahead of today’s big CPI report.

Now that risk aversion has subsided, investors are growing confident enough to buy up the pound again. Of course, the currency may have also been supported by expectations of stronger inflation.

With the U.K. CPI report just hours away (9:30 am GMT), traders may be buying up the pound in anticipation of a strong reading. Forecasts say inflationary pressures increased last month from 4.0% to 4.2%. Economic data hasn’t been impressive in the U.K. lately, so strong inflation may be pound bulls’ only hope for a rate hike.

Also on tap at 9:30 am GMT is public sector net borrowing data. Forecasts see net borrowing showing a budget deficit of 6.8 billion GBP, the complete opposite of January’s 5.3 billion GBP surplus. As you know, the U.K. has taken on austerity measures, so there’s a chance this figure may come in better than expected.

Then at 11:00 am GMT, the CBI industrial order expectations report will be available. Survey says that manufacturers are becoming less pessimistic. According to forecasts, the report will likely upgrade its reading from -8 to -5 for the month of March.

Quite an interesting lineup of reports, eh? I wouldn’t be surprised to see big moves today. Just remember to practice smart risk management when trading, kids!

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With inflation still hot, hot, hot, there was nothing that could stop the pound from skyrocketing to a new high against the dollar! GBP/USD tapped its highest level since January 2010 at 1.6402 before ending the day 55 pips higher from its opening price at 1.6365.

I bet pound bulls were on cloud nine when the headline CPI figure for February overshot the consensus by 0.2% and printed at its 28-month high of 4.4%. The core version, which excludes volatile items, also topped the 3.2% forecast when it came in at 3.4%. Consequently, the report once again sparked rumors of an interest rate hike from the BOE.

Fueling the pound even higher on the charts was the CBI Industrial Industrial Trends Survey for March which showed that manufacturers see job orders stacking up in the next three months. The index clocked in its first positive reading in four months at 5.0 and beat the consensus which was for a 5.0 decline. Boo yeah!

It wasn’t all good in the hood though. We saw yesterday that public net sector borrowing overshot the consensus at 10.3 billion GBP. Analysts had expected spending to have been more modest at 6.8 billion GBP ahead of Chancellor of the Exchequer George Osborne’s budget announcement scheduled later at 12:30 pm GMT.

I wonder how if this will convince the U.K.'s head honcho for fiscal and economic matters to impose more stringent budget cuts.

As Forex Gump has said in his weekend blog, tougher austerity measures could be bullish for the pound if the government’s initiative to reel in its deficit inspires investor confidence. On the other hand, they could also be bearish for the currency if markets feel that budget constraints will weigh too much on economic growth. So make sure you keep an ear out for what Sir Osborne has to say!

Also keep your eyes peeled for the minutes of the MPC’s most recent meeting due at 9:30 am GMT. We know that in February, MPC members Dale and Weale joined resident hawk Andrew Sentance in voting for a rate hike. A few giddy chaps are speculating that the hawks might have convinced another MPC member to holler tightening too. If this is the case, we may just see the pound tap a new high!

Last on our economic calendar for the pound today is mortgage approvals report for February. A figure higher than the 29.4k that the market is expecting will probably be bullish for the currency too so be on your toes!

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“Sticks and stones may break my bones, but words will never hurt me.” Hah! Whoever made up that popular children’s rhyme clearly isn’t familiar with the world of forex. Dovish words from Chancellor Osborne and cautious comments in the MPC meeting minutes devastated the pound yesterday. Cable practically fell from the sky as it dropped 128 pips to end at 1.6236.

The MPC meeting minutes revealed 6-3 voting against rate hikes as many MPC members remain cautious about domestic demand weakness. Of course, those who were pro-rate hikes, such as Sentance who voted for a 0.50% increase, argued that the U.K.’s uncomfortably high level of inflation is reason enough to raise rates.

What also weighed down on the pound was U.K. Chancellor Osborne’s budget speech. According to Osborne (no relations to Ozzy), the government will be buying more high quality assets… which is basically just a fancy way of saying "More quantitative easing!” He also announced that the government is lowering its growth forecasts for 2011 and 2012. Phew! If that ain’t a downer, I don’t know what is!

Lost in all the words from government officials was the BBA mortgage approvals report, which printed a better-than-expected increase of 29,900 last month, up from 29,200 in January.

Today, we have retail sales data on tap at 9:30 am GMT. Now remember, one of the BOE’s biggest concerns is weak domestic demand. If this report can somehow deliver a better figure than the forecasted 0.5% decline, then maybe some members of the BOE will ease up on their dovishness.