British Pound: Consolidation Could Bring A Breakout

The British pound has done nothing but consolidate gains above 1.9800 following last Wednesday?s rally as all signs pointed to another Bank of England rate hike. However, Cable could make a turn for the worst this week as almost every indicator - including GfK Consumer Confidence, Nationwide House Prices, and PMI Manufacturing - is due to ease back.

GfK consumer confidence is predicted to slip to -7 from -6 as persistent inflation and rising interest rates have put a dent in sentiment. Nationwide house prices are also on tap, and the figure could help confirm or negate recent signals that sky high property values and increased borrowing costs are finally taking a toll on demand. Finally, PMI manufacturing is expected to ease back very slightly, but should still reflect strength in the slowly recovering sector. Without encouraging fundamental data available to keep speculation of further BOE tightening afloat, the British pound may have nowhere to go but down.