British Pound Advances Towards 2.10

In yesterday’s Daily Fundamentals, we said the biggest driver of British pound strength and weakness is US fundamentals and not UK fundamentals and today is a perfect example of that dynamic unfolding once again.

Both the GDP estimate and the BRC retail sales monitor were weaker than the prior month but neither was a surprise given the overall trend of weaker economic data. When compared to the upside surprises in Eurozone data, it is not hard to understand why EURGBP has been rallying three days in a row. Bank of England Governor King was also on the wires warning that it could be several months before banks return to normal. In the meantime, there is no UK economic data due for release tomorrow but the BoE will begin their 2 day monetary policy meeting.