Economic data out of the UK has been extremely thin this week, leaving Cable to consolidate near the 2.0500 level. The sole piece of data today showed that mortgage approvals dropped during the month of August, suggesting that the Bank of England’s tightening cycle earlier in the year has finally started to take a toll on the housing market.
Nevertheless, BOE Governor Mervyn King shows few signs of letting up on his hawkish bias despite softer inflation pressures, leaving the central bank unlikely to cut rates until at least Q1 2008.