Since most of the UK data that was originally scheduled for release today hit the wires yesterday; the scheduled economic docket was expected to generate few waves. However, the Bank of England’s quarterly inflation report was potent enough to drive the currency on its own.
Governor Mervyn King delivered a disappointing outlook for an economy already pegged as the worst performing in the industrialized world. The policy maker said the nation was likely facing a “slow and protracted recovery” and that there was reason to doubt that an eventual rebound can sustain itself. No matter how consistent the warnings and dour the projections, fundamental traders never seem fully accustomed these negative forecasts (unlike saw the US dollar). With an empty docket through the rest of the week, the pound will be at the mercy of risk appetite.