The British pound broke above the 2.0 barrier following much stronger than expected house prices in the month of June. Originally expected to remain steady, house price growth doubled expectations.
Next week, the Bank of England is set decide on interest rates and given recent economic data, there is a decent chance that the central bank will raise interest rates to 5.75 percent. Bank of England Governor King said this morning that the balance for inflation risks still remain on the upside and indicated that 25bp hikes will not do much to hurt domestic consumption. These are the words of a hawkish central banker which says a lot a week before an interest rate decision. Tomorrow we have the GfK consumer confidence report. No major changes are expected there as stronger retail sales and higher house prices offset weaker average wage growth.