The British pound fell to a record low against the Euro.
Since the middle of the month when the Bank of England released minutes that were more dovish than the market was anticipating, the pound has been on a one way downtrend against the Euro and Swiss franc. Over the past 4 months, EURGBP which has traditionally been a more range bound currency pair has really taken on a life of its own. This is a testament to the impact of interest rates on currencies because the monetary policy biases of the European Central Bank and the Bank of England have been the main drivers of EURGBP strength. Nationwide house prices were also released this morning. Even though the British pound is weaker across the board, the sell-off was not triggered by the larger drop in house prices. The average price of a home in the UK is now the lowest since 2006. The housing market is a big problem for the UK economy and we expect it to remain a focus next week with mortgage approvals and construction PMI due for release. In addition to that, we are also expecting the manufacturing and service sector PMI reports.