The British pound has strengthened against both the US dollar and the Euro on news that HBOS could raise up to GBP4 billion in a rights issue.
Although the mortgage lender faces up to GBP3 billion worth of write downs, the new capital infusion is news that is very much welcomed by British pound traders. Unfortunately, trouble in the UK housing market is not behind us. Tomorrow we have a number of housing market reports due for release including mortgage approvals, net lending and consumer credit. The CBI Distributive Trades report is also expected and there is only a slim chance that spending would have increased given the problems in the financial sector, the slowing housing market and the prospect of a further deterioration in the labor market.