Despite stronger than expected UK industrial production data, the British pound slipped for the fourth consecutive trading day. The Bank of England?s interest rate hike this week certainly was a classic “buy the rumor, sell the news” type of event.
The currency rallied extensively into the rate decision and dropped almost instantly after rates were hiked. This should mark a near term top in the British pound, at least until the minutes from the meeting are released. Next week, producer prices, BRC retail sales and the trade balance are due for release. Unlike the rest of the world, the strength of the British pound will offset the rise in crude prices. The service and manufacturing sector PMI have already reported a drop in prices. This suggests that inflationary pressures on the producer level may not have been that high in the month of June.