The British pound was the only major currency to weaken against the US dollar today. Economic data was mixed with average earnings increasing more than expected while the drop in claimant was smaller than the market?s forecast.
This may be due to the potential consequences of the rise in sterling LIBOR rates, which are at a 9 year high. The UK has its own bubble troubles and a higher LIBOR rate only means higher borrowing costs and mortgage payments. UK consumers are up to their neck in as much debt as US consumers. Today?s price action reflects concerns that the bubble may burst.
Written by Kathy Lien, Chief Currency Strategist of DailyFX.com