It was rough sailing for Lady Cable yesterday, as it gave back all its gains versus the dollar. GBP/USD dropped 77 pips to finish at 1.5566. Is the pound in for more losses today or can the bulls make a comeback?
Mixed data may have been cause for the pound’s downfall yesterday.
The British Banking Authority released a report that indicated that the number of mortgage approvals for last May came in at just 30,200. This was worse than the projected figure of 32,800, and a significant drop from April’s pace of 32,100.
This is indicative of two things. First, that not as many consumers are qualifying for mortgage loans. Second, those who do qualify are holding back on adding any additional debt.
On the flip side, the CBI realized sales report printed much higher than expected, coming in at 42. It was projected to have a score of just 12. This means that more retailers reported higher sales in the past month.
If the report came in that much better-than-anticipated, why didn’t the pound rally?
Apparently, the CBI believes that the figures are a fluke and may have been distorted by additional holidays over the past month. We’ll have to wait till next month’s release to see whether this is true or not.
For today, we’ve got a whole slew of data headed our way during the London session.
First, more housing data in the form of the Nationwide HPI will be available at 6:00 am GMT. Word on the street is that housing prices rose by 0.3% in the past month.
Later on at 8:30 am, we’ve got a trio of reports headed our way.
The current account is expected to show a deficit of 8.9 billion GBP. No surprises here, the account has been in the red since mid 2003!
The Bank of England will also be releasing its credit conditions survey, which should help provide more insight into the state of British lending. If it shows that credit conditions are deteriorating, it would simply be in line with other data that we’ve received lately.
Lastly, the final quarterly GDP report is projected to show no changes from the previous release, which indicated that the British economy dropped by 0.3% last quarter.
If all these reports come in weaker-than-expected, it could trigger another pound sell-off midway through the London session.
Phew, that was a long one! Good luck trading today homies!