This week, economic data has had zero impact on the British pound.
Over the past few days, the currency pair managed to rally on weaker economic data and today it sold off despite a smaller drop in manufacturing PMI. The move in the sterling is largely due to the overall strength of the US dollar although there were some positive news from the UK government this morning. According to the bank of England’s Financial Stability Report, the worst of the global financial crisis could be over. Prime Minster Gordon Brown also promised to cut corporate taxes to prevent UK companies from moving abroad. At the same the BoE warned that the country’s biggest banks could see major losses as the commercial mortgage market deteriorates. Nonetheless the UK economy is still in a vulnerable position which makes further gains unlikely.