Softer economic data has not stopped the British pound from rallying. Money supply, house prices, mortgage approvals and consumer confidence were all weaker than expected.
Even though the CBI distributive trades survey was firmer, it still dropped significantly from the prior month. Incoming economic data from the UK has been weak which indicates that even though the members of the monetary policy committee debated between a 25 and 50bp rate hike, they do not have the fundamental reason to lift rates again over the next few months. After the hawkish MPC minutes, traders were expecting another hike as early as July, but with the economy clearly weakening, the central bank may be forced to hold off until September, which has led to the pound?s underperformance against the dollar and Euro.