The British pound lost ground against the US dollar as economic data confirmed further softening in the UK economy.
GfK Consumer Confidence hit a record low as worries of high oil prices, turbulent housing market and tight lending conditions took its toll on the locals. Markets reacted sharply to this unexpected drop, as the realization of turbulent times ahead dawned on investors. Record low Mortgage approvals raised further concerns amongst traders who know that the UK housing market is the Achilles heel of the UK economy. Looking ahead, Nationwide Housing Prices and Manufacturing PMI figures are expected to show further weakness, but we actually think that the manufacturing data could improve given the rise in the CBI industrial trends survey. If this is true the British pound should continue to rally.