After opening the week at 1.5822, Cable slow-danced within an 80-pip range and ended the day only 17 pips higher at 1.5839. So, to what beat did the pound bulls cha-cha to yesterday?
Well, it seems like there was still the market’s aloofness to the dollar which might have been enough to counter the disappointing housing data we saw over the weekend. Hometrack released the results of its housing survey for August which showed that house prices were lower by 0.50% at 1.0% during the month than in July. This translates to the fourth consecutive month of decline. Yikes!
I wonder if the pound will still be able to shake its currency booty if today’s reports fail to meet the expectations of traders. At 8:30 am GMT later we’ll have the final reading of UK’s second quarter GDP. Analysts are eyeing a 1.2% growth rate during the quarter which is equal to a 1.7% increase on a yearly basis. A better-than-expected figure will probably be bullish for the pound as this would somehow ease concerns about the Bank of England (BOE) following the Fed Reserve in launching [QE2](http://www.babypips.com/forexpedia/Quantitative_Easing).
Then at 10:00 am GMT, we’ll have the [CBI Distributive Trades index](http://www.babypips.com/forexpedia/CBI_Industrial_Trends_Survey_-_United_Kingdom) for September. The consensus is down to 27.0 from August’s 35.0 reading which means that analysts see consumer spending to have not been as hot as it was in the previous month.
Be sure to watch out for these reports later as they may choreograph the pound’s fate on the charts in today’s trading!
Say hello to yesterday’s big loser! The pound made losing look easy as it fell hard against the USD. Though the UK printed positive reports, GBPUSD slipped from its opening price of 1.5850 to land at 1.5793.
It looked like the pound was set to make new highs early in the day as the UK released a couple of positive reports.
First, the current account deficit shrank from 11.3 billion GBP to 7.4 billion GBP to exceed expectations for a 9.6 billion GBP deficit in Q2 2010.
After that, it was revealed that the retail scene improved in September when the CBI distributive trades report printed a reading of 49, much higher than last month’s 35, and far better than the expected 25.
Unfortunately, none of these reports stood a chance against MPC member Posen’s words. In his speech, Posen called for further quantitative easing, basically putting the UK in the same boat as the US. The BOE is becoming more and more concerned about the country’s economic outlook, especially since unemployment remains high and inflation remains well above their target. It’s interesting to see if the pound will follow the USD’s footsteps now that the BOE is considering further easing, too.
You’ll have more to think about when the net lending to individuals data hits stands at 8:30 am GMT. Last month, we saw 300 million GBP-worth of new credit issued to consumers. But we might see the pound sell off even more if results for the month of August fail to meet forecasts for 500 million GBP.
Then at 11:01 pm GMT, GfK publishes its consumer confidence report. Last month’s figures were already pessimistic at -18, so don’t be surprised to see investors abandon the pound if the report prints a reading lower than the expected -19!
Like latest Dancing With the Stars kick-out, Michael Bolton, the pound wasn’t feelin’ the love yesterday either. It shimmied its way to an intraday high of 1.5875 against the dollar, but was unable to hold on to its groove and landed on its tush at 1.5783 with a 10-pip loss.
As Forex Gump discussed in his blog yesterday, the pound was put under the bear spotlight when FOMC member Adam Posen suggested QE2. Easing monetary policy isn’t a done deal yet, but the disappointing data that we saw yesterday might have just supported Posen’s view that more stimulus is need in order for UK to cha-cha back into the path of recovery.
Let’s take a look at them, shall we?
Despite beating the 47,000 consensus, mortgage approvals was at its lowest in 7-months at 47,370 in August. This was a stark contrast to the significant improvement in net lending which came in at 1.66 billion GBP and overshot the market’s 300 million GBP projection. Some naysayers take this as an implication that there is higher demand for more expensive homes but it doesn’t really ease concerns about the housing market which is plagued by falling house prices.
Then there was the net consumer credit for the month which declined by 120 million GBP, the most since November 2009, and missed the 100 million GBP increase that the market had anticipated. Uh oh…
Providing more support to Posen’s dovish stance were the index of services which only increased by a measly 0.5%, falling short of the 0.7% consensus, and the GfK consumer confidence figure that slumped to -20, disappointing the -19 forecast.
Yikes! I wonder if today’s reports will provide some relief to the pound. At 6:00 am GMT we have Nationwide’s HPI for September which is seen to have declined by 0.3%. Then at 8:30 am GMT, we’ll get more information on the lending conditions in Britain with the BOE’s credit conditions survey for the third quarter. Good luck and may the pips be with you!
Ahh, there goes another case of “Loose lips sink pips” for the pound. The currency fell against almost all of its major counterparts during yesterday’s trading, losing the most to the yen with 88 pips, then to the dollar with 73 pips, and the euro with 43 pips. Ouch! So, who was it that uttered the letters Q and E this time?
A few fingers point at British Chamber of Commerce’s Chief Economist David Kern. In an interview yesterday morning, he backed up Posen’s dovish stance by saying that UK may be need more stimulus to get its economy hustlin’. Yikes! By the way, for more information on MPC member Adam Posen’s comments, you can read Forex Gump’s blog. I also got my metaphor from him! Thanks bud!
Moving on, the pessimism was enough to cripple the bulls and counter the any positive vibes that yesterday’s of better-than-expected HPI might have offered. According to Nationwide, house prices increased 0.1% in September for the first time in 3 months, paring its previous 0.3% decline.
You may want to tune in to the manufacturing PMI for September later at 8:28 am GMT, and see that maybe another positive figure will be enough to get the pound out of the bears’ rut. It is expected that manufacturing activity slowed during the month with the forecast down to 53.8 from its previous reading which was at 54.3. But be careful! If the actual figure is lower than the consensus, we may just see the pound tumble further down the charts!
Not even weak economic figures from the UK could stop the pound from outpacing the Greenback last Friday! GBPUSD zoomed from a low of 1.5670 to a high of 1.5873 before closing at 1.5836. Was this really a result of pound strength or was the US dollar just too weak?
Judging from the movement of EURGBP, it seems that traders are still very bearish on the pound. The pair climbed to the .8700 handle after UK revealed worse than expected economic figures last week. Manufacturing PMI fell from 53.7 to 53.4 instead of rising to 53.9 in September. Even though the index is still safely above the 50.0 mark which indicates industry expansion, the September reading marked its slowest pace of growth.
Meanwhile, the housing equity withdrawal data reported a drop from -5.3 billion GBP to -6.2 billion GBP. This means that more people are taking advantage of lower interest rates and using equity to fund their housing loans. This month’s figure reflects that mortgages are really taking their toll on consumers’ income.
Moving on to this week… The main event on UK’s calendar is the BOE rate statement on Thursday. Remember how MPC member Posen’s call for more easing? Well, we just might see whether he was able to get more policymakers to agree with him once they release their monetary policy decision at 11:00 am GMT. If the central bank decides to increase its asset purchases, it could mark the end of the pound’s rally against the US dollar.
But before that, some top-tier reports are on deck for the first few days of the week. Today, UK is set to release its construction PMI for September and this could show a drop from 52.1 to 51.6. Stay tuned for that at 8:30 am GMT. Later on, BOE Deputy Governor Paul Tucker is set to give a speech at 10:30 am GMT. Keep your ears sharp and listen for any hints about the BOE’s upcoming policy decision.
On Tuesday, the Halifax HPI and the services PMI are due. House prices are expected to post a 0.6% increase in September, marking its second monthly rise. Then the services PMI is expecting a downtick from 51.3 to 51.2 in September, signaling that the industry’s expansion was slightly weaker during the month.
Before the week comes to a close, UK will release its PPI for September and reveal a 0.3% increase in input prices. If the actual data meets the consensus, it would mark its first increase in five months. Stay tuned for that at 8:30 am GMT Friday.
Despite gapping lower to start the week, GBP/USD kept its head above water on the “strength” of good economic data. After opening at 1.5786, the pair rose 46 pips to close at 1.5832.
The strength I am talking about, my forex friends, is the better than expected results of the construction PMI report. The data came in at 53.8, beating the 51.4 forecast. While this isn’t a high impact report, it did provide support for the pound, as it was certainly surprising given the recent weakness in the U.K. housing market.
Watch out later today at 8:30 am GMT, as the services PMI report will be released. Who knows, we may just see today’s report beat the consensus of 51.1! Will we see another surprise in the market? If we do see a better than expected figure, could we see GBP/USD resume its move all the way up to 1.6000?
Buyers lined up for the pound when they heard it got swagger thanks to better-than-expected economic reports. After dipping to an intraday low of 1.5752, GBP/USD hustled up to a peak at 1.5931 before finishing of at 1.5892.
The pound bulls breathed a sigh of relief when U.K.’s services PMI printed at 52.8 and beat the projected 51.0 reading. News of increased activity in the service sector was more than awesome for them especially now that investors are desperate for clues about the BOE’s decision on whether or not to provide more stimulus for the economy.
Making things even better was the British Retail Consortium shop price index which showed that prices of goods bought at a number of retail stores increased to 1.9% in September from 1.7% in August. Boo yeah!
Of course, it also helped that the dollar didn’t get much lovin’ from investors. Ha!
Anyway, it looks like the pound won’t be getting much support from economic reports today. Halifax may release its HPI later at 7:00 am GMT or tomorrow, so be on your toes for that! A figure higher -0.2% will probably be bullish for the currency. Make sure to also keep tabs on the up-and-abouts of the pound’s counterparts.
Threats of austerity measures got the better of the pound yesterday when the lack of reports from the U.K. inspired the pound bears to party in the pip streets. GBP/JPY dropped by 48 pips at 131.75. Meanwhile, GBP/USD leveled off to a 2-pip loss after hitting an intraday low of 1.5834.
Awww, and the U.K. tried so hard. Recall that the country has been printing better-than-expected economic reports this week, from the construction and services PMI reports, to the BRC shop price index report last Tuesday.
But it looks like traders are all hot and bothered about the upcoming MPC statement today. Word around the forex streets is that it might do its own version of a mini quantitative easing by increasing its asset purchases.
But that’s not the only red flag around the corner! The Halifax house prices report is also scheduled for a spotlight today at 8:30 am GMT. Market geeks already pegged the figure at a 0.6% increase, but a better-than-expected number might turn things around for the pound. Also at 8:30 am GMT, the manufacturing production report for August will be released.
Then, all eyes are going to be on the MPC members at 11:00 am GMT as they announce their interest rate decision. Many expect the cash rate to remain at 0.50%, but markets are going to be all ears for any hint of quantitative easing.
Try again, buddy! Despite the relatively better-than-expected data from the UK, the pound capped the day nearly unchanged against its major counterparts. GBP/USD soared to an intraday high of 1.6018 before leveling off to its 1.5862. Meanwhile, GBP/JPY hit an intraday high of 131.91 before closing 105 pips lower at 130.70.
The Bank of England left its interest rates unchanged at 0.50% yesterday, and maintained its asset purchases at 200 billion GBP. This was welcome news to the forex geeks who were at the edge of their seats for an expansion in quantitative easing.
The industrial production report should have also tempted the currency bulls when the data clocked in at a 0.3% growth in August. This was the report’s fourth consecutive monthly rise and the highest annual growth in 16 years. High five!
Too bad other forces soon factored into play. Whether it was profit-taking ahead of the NFP report in the US, or reaction to the worse-than-expected Halifax house prices and NIESR GDP estimate, the pound soon erased its gains across the charts. Aww man!
Will the pound have another go at gaining some pips? The producer price index is set for release at 8:30 am GMT. The input prices is expected to increase by 0.3% last month after dropping by 0.5% in August, while the output prices is seen to grow by 0.2%. Higher-than-expected numbers for these reports might tell us more about the BOE’s decision to cap its economic stimulus.
Oh yeah, today is the first day of the IMF and G7 meetings! Will we see the finance officials locking horns on the “currency wars”, or will they agree on new policies? Watch your charts closely on these reports!
Did you smell what the pound was cookin’ last Friday? If you say pips then, ding, ding, ding! GBP/USD closed 95 pips higher at 1.5957 on Friday, choke-slamming a total of 171 pips from the dollar during the week. It was also able to wrestle 41 pips from the euro as EUR/GBP ended the day lower at 0.8729.
The positive inflation figures from the UK might have pumped up the pound bulls to go on a pip-frenzy. Output and input prices for September beat their respective forecasts by printing at 0.3% and 0.7%, respectively. The market was only eyeing a measly 0.1% increase in output prices and 0.4% increase in input prices. These figures could imply that inflation is still higher than what the [BOE](http://www.babypips.com/forexpedia/BOE) wants and lowering chances of the UK getting another dose of [QE](http://www.babypips.com/forexpedia/Quantitative_Easing) before the year ends. Tune in for the country’s official inflation data with the CPI report due at 8:30 am GMT. Analysts are betting it to come in at 3.1%.
For today we have the results of RICS housing survey for September at 11:00 pm GMT. House prices are seen to have tumbled further during the month with the forecast down to -36.0 following the -32.0 reading in August. We also have BOE Governor King and Deputy Governor Tucker speaking in separate venues today at 6:00 am GMT. Keep an ear open for their speeches as they may drop hints on the central bank’s future policy decisions. Happy trading everyone!
“[I]We’ve got opinions man, we’re all entitled to ‘em… swear you know best…[/I]” The Bank of England’s Governor Mervyn King might not be Sara Bareilles’ king of anything, but the markets sure listen to him! His bearish comments on his speeches yesterday sank the pound against its major counterparts. GBP/USD fell by 70 pips to its 1.5873 closing price, while GBP/JPY gave up 36 pips and closed at 130.34.
In a conference with other central bank leaders yesterday, King mentioned that the worst might not be over in the UK, and that the monetary policy should be accompanied with regulatory policy to obtain overall stability. Uh-oh. This didn’t get any applause from the investors, especially when the Reserve Bank of Australia talked about growth in the same conference.
Of course, it didn’t help that economic reports in the UK were worse than expected. The BRC retail sales report clocked in at a 0.5% growth after rising by 1.0% in August, while the 36% decline in RICS house price data showed implied that more property surveyors are dropping their prices. Tsk tsk.
Will the pound get a chance at gaining pips today? The CPI data will start the day at 8:30 am GMT. A figure higher than the 3.0% mark could mean that inflation remains a big problem for the UK, and push the pound lower in the pip charts.
The trade balance report is also due at 8:30 am GMT. Analysts peg the number at -8.0 billion GBP, but a higher figure might attract some of the currency bulls.
Lastly, the Nationwide consumer confidence report will join the parade at 11:01 pm GMT. The figure is expected to climb to 64 from its 61 figure in July, but a higher figure could give the pound a boost against its counterparts.
Look down beloooooow!!! The sterling fell to pip-deeps against its major counterparts yesterday after the currency bulls dropped the pound like a smokin’ hot potato. GBP/USD leveled off to a 74-pip loss at 1.5799 after dipping to an intraday low of 1.5756. Meanwhile, EUR/GBP soared by 69 pips at .8809, and GBP/CHF fell by a whopping 189 pips at 1.5120. Yeouch!
After yesterday’s disappointing reports in the UK, who wouldn’t want to ditch the currency? Inflation remained stubbornly high at 3.1%, even though core CPI eased to 2.7%. This heightens the Bank of England’s dilemma between raising interest rates and quantitative easing. You see, though prices remain high in the UK, the economy is also struggling with weakening demand and consumer confidence. Tsk tsk.
The trade balance report also gave off some gloomy vibes when the trade deficit only narrowed down to 8.2 billion GBP, which was still higher than the expected 8.0 billion GBP figure.
Lastly, the Nationwide consumer confidence report dropped by 9 index points from 62 in August to 53 in September. Guess the traders aren’t the only ones skittish about the UK economy, eh?
Will the pound have a chance to bounce back up the charts? The claimant count change report will start the day at 8:30 am GMT. The number of people claiming unemployment-related benefits is estimated to escalate by 4,300 in September.
Speaking of unemployment, the jobless rate will also be released at the same time, together with the average earnings index report. The unemployment rate is expected to remain steady at 7.8%, while the average earnings is expected to rise by 1.6%.
Finally, Monetary Policy Committee member Andrew Sentence will give a speech in London at 5:40 pm GMT. Will he give more hawkish speeches, or will he finally join his peers and support additional easing?
The pound was unstoppable yesterday! Not even weak employment figures could weigh it down as it outpaced the Greenback, yen, and euro. GBPUSD climbed from an open price of 1.5798 to a high of 1.5909 while GBPJPY landed safely above the 130.00 handle.
UK’s claimant count change report showed that 5,300 people filed for unemployment claims in September, which is higher than the projected 4,300 figure and the previous month’s 3,800 reading. This shows that the UK labor market is continuing to show signs of weakness even though the unemployment rate fell from 7.8% to 7.7% during the month. Average earnings came in better than expected, posting a 1.7% increase instead of the 1.6% rise initially expected.
UK won’t be releasing any economic reports for today so make sure you stay tuned to news from other major economies which could affect market sentiment.
Lo and behold the mighty Cable… at least for now! Despite U.K.'s empty economic calendar, Cable was still able to rally to new 8-month highs as U.S. fundamentals continue to sour. Cable had soared all the way to 1.6067 during the European session before it eventually settled at 1.6010 by the end of the U.S. session.
Judging from the move yesterday, it looks the U.S.'s bleak fundamental outlook is weighing heavily on the dollar, which has caused currencies like the pound and the euro to be bought up. While U.K. isn’t doing very well either, it really didn’t matter, as it is… uhhh, the [I]lesser of two evils[/I].
Nothing on U.K.'s economic calendar today, but that doesn’t mean we won’t be seeing any fast moves! Look to the release of the U.S. retail sales report and the CPI at 12:30 pm GMT to provide volatility for Cable.
D’oh! It was so close! Despite the lack of reports from the UK last Friday, the sterling gave up its gains against the dollar and the yen. EUR/GBP might have fallen by 52 pips, but GBP/JPY also gave up 24 pips at 130.14. Meanwhile, GBP/USD capped the day with a 19-pip loss after peaking at an intraday high of 1.6107.
The U.K. economic boards are empty again today, but I see a lot of red flags around the corner! After showing the 3.1% growth in the Rightmove house prices last Sunday, the next highlight of the week is tomorrow at 10:00 am GMT when the CBI industrial order expectations is released.
Bank of England Governor Mervyn King will then steal the spotlight at 6:50 pm GMT when he gives his speech at the Black Country Chamber of Commerce in Dudley. Hmm, will we hear some spoilers on the MPC meeting minutes scheduled on Wednesday at 8:30 am GMT? The traders are already at the edge of their seats in guessing how close the MPC is to quantitative easing!
The parade of red flags will continue with the data on public sector borrowing on Wednesday at 8:30 am GMT, followed by the volatile retail sales and mortgage approvals reports on Thursday at 8:30 am GMT.
Adam Posen, the Monetary Policy Committee member in favor of quantitative easing, is the last to hit the economic calendar this week when he gives his speech in Vienna on Thursday at 9:15 am GMT.
Watch your charts closely when these reports come out!
Though pound bulls gave a valiant effort, the bears were simply too strong for them. As a result, the pound was one of yesterday’s biggest losers, sliding against its major counterparts due to talks of quantitative easing. GBP/USD fell 44 pips to land at 1.5932 while GBP/JPY slid more dramatically, slipping 73 pips to end at 129.33.
Coming off of Sunday’s Rightmove positive house prices report, you would think the pound would rally hard.
Unfortunately, speculation that the BOE may follow in the footsteps of the Fed with quantitative easing kept the pound from rising. Estimates say the central bank may widen its stimulus program by another 50% and increase its asset purchase program to 300 billion GBP to keep their economy rolling.
Don’t worry too much, bulls. This is far from a done deal. The central bank remains divided over the whole QE issue with Posen saying “Yay!” and Sentance saying “Nay!” What about the others? Sorry, you’ll have to wait until the MPC releases the minutes of their most recent meeting tomorrow to find out.
For today though, we’ve got a couple of note-worthy events on deck.
At 10:00 am GMT, expect to see the CBI industrial order expectations report worsen from -17 to -19 in the month of October. Negative values in this report mean that manufacturers are expecting lower order volume in the coming months.
This report is particularly important because it gives us an idea of how businesses will react over the coming months. Will they cut spending in anticipation of a decrease in orders? Or will they increase investments because they believe business will pick up? If we see actual results fall short of expectations, it may accelerate the pound selloff.
Then at 6:50 pm GMT, BOE Governor King will speak before the Black Country Chamber of Commerce. As usual, keep your eyes and ears glued to the tube when the man speaks! Be on the lookout for dovish words that may sink the pound deeper.
By the way it was slippin’ and slidin’, you would think the pound was on summer vacation! A disappointing report coupled with worried words from BOE Governor King took the pound down against the USD. Cable closed at 1.5700, a whopping 232 pips lower at the end of the day.
The day started off on a sour note with the release of the U.K.’s CBI industrial trends report. Analysts were way off with their forecasts for a reading of -19 following last month’s -17. The actual results for were far worse at -28! Basically, this raises a red flag and says that weakened demand has taken its toll on the manufacturing sector.
On the plus side, the expectations component of the survey noted that manufacturers have become more hopeful for the future. But you have to wonder if they can continue looking on the bright side given the rough road ahead for the economy.
The pound’s weakness shouldn’t have really caught you off guard since the BOE is basically on the same boat as the Fed.
Concerns over quantitative easing arose once again as BOE Governor King took center stage yesterday. He expressed the central bank’s worries about a sharp drop in inflation, hinting that monetary policy may help ease the transition. I don’t know about you, but it seems like the BOE is just waiting for inflationary pressures to subside before pulling the QE trigger.
Today’s main event is the release of the MPC’s most recent meeting minutes. We all know the results of the meeting (unchanged rates and asset purchase program), but what the minutes contain may actually be more note-worthy. We’ll get a better picture of how close the BOE actually is to going down QE road. Who are siding with Posen and are pro-stimulus, and who are with Sentance and share his anti-QE stance? Find out at 8:30 am GMT.
Also on tap is the public sector net borrowing data for September, which is slated to soften from 15.3 billion GBP to 14.3 billion GBP. However, the expected drop is actually a good thing because it indicates a shrinking budget deficit. So look for lower figures at 8:30 am GMT if you’re siding with the pound bulls.
“[I]I like it… I, I, I like it[/I]” The sterling bulls danced to Enrique Iglesias’ tune yesterday as the pound rose to the pip charts despite the not-so-stellar reports in the U.K… EUR/GBP might have risen by 60 pips at .8805, but GBP/USD and GBP/JPY also rocked the charts at 1.5842 and 128.79 respectively.
Yesterday the MPC meeting minutes revealed the three-way split that the markets have been raving about. In the 7-1-1 scenario, Andrew Sentence voted for an increase in interest rates; Adam Posen wanted a 50 billion GBP increase in quantitative easing; and seven members elected for a steady interest rate.
The red numbers in the public sector borrowing report might have also limited the pound’s gains when the government deficit swelled to 15.6 billion GBP from its 14.2 billion GBP figure in August. Good thing Chancellor George Osborne reduced some of the heat when he reported his plans on budget cuts in health care budgets, business, overseas aid, and agriculture that could amount to 83 billion GBP.
Today the retail sales report will be released at 8:30 am GMT. The figure is expected to show a 0.3% growth after dropping by 0.5% last August, but a worse-than-expected number might dampen the party for the pound bulls.
The preliminary mortgage approvals will also be out at the same time, and a figure lower than the expected 44,000 increase in approvals could also be bearish for the pound.
Joining the other majors, the pound took the backseat to the USD as weak consumer spending took its toll on the British currency. And against the euro, it performed just as badly. GBP/USD slid 144 pips and finished at 1.5698 while EUR/GBP rose 63 pips to forge a new 6-month high at .8869.
We all know how worried the BOE sounded in their most recent statements. Members of the central bank seemed very concerned over the country’s economic recovery, and it looks like they have reason to fret.
Instead of posting a 0.4% uptick as expected, yesterday’s retail sales report showed a disappointing 0.2% month-on-month downtick. September’s decline marks the second consecutive monthly drop in retail sales as August recorded a 0.7% fall as well. Analysts blame strong inflationary pressures for drying up demand. It appears that as prices continue to skyrocket, consumers have become less likely to spend.
Unfortunately, the outlook doesn’t seem so bright for domestic demand either. Many believe that the VAT increase to be implemented in January will weaken demand even more.
Could this force the BOE to act and push for quantitative easing before the end of the year? The weakness in consumer spending certainly presents a strong case for QE, but the central bank will probably wait for inflationary pressures to subside before pulling pushing for further stimulus.
Today, we get a break from U.K. reports. In the meantime, see what world leaders have to say about the state of the global recovery when the G20 meetings start later in the day. Good luck, playas!
After a week of struggling against its major counterparts, the pound held on tight and refused to fall below the 1.5650 handle against the Greenback. Don’t let go, pound bulls! Cable ended just 17 pips lower for the day at 1.5681 as talks of quantitative easing continued to keep buyers away.
With no economic data on deck last Friday, it was no surprise that action on Cable was subdued. However, it looks like the markets still feel a bit negatively towards the pound because of the possibility of a second round of quantitative easing.
Perhaps what’s keeping the pound from taking a nosedive is the fact that the BOE still seems divided over the whole issue. And don’t forget, the U.K. still has high inflation standing in the way of QE.
Today, we have the BBA mortgage approvals data coming out at 8:30 am GMT. Analysts are expecting to see the number of new mortgages approved ease from 31,770 to 31,000 in September.
This week’s biggest report, the preliminary GDP data for the third quarter of 2010, is due tomorrow at 8:30am GMT. Given the retail sales the U.K. posted in August and September, I wouldn’t be surprised to see growth fall from 1.2% to 0.4% in Q3 as forecasted.
Also tomorrow, MPC members are scheduled to hold their inflation report hearings before the Treasury Committee. Expect to hear my MPC homeboys talk about the country’s economic outlook and inflation situation. Since we may get a better idea of how the government plans to act in the future, you obviously shouldn’t miss it! Remember, dovish words are usually bad for the pound!