Though the U.K. reports we got yesterday weren’t exactly bull-friendly, the pound was able to chalk up decent gains against the dollar. Cable began its rally at the very start of the day, and by the end of the New York session, it had reached 1.5643 for a 70-pip gain on the day.
Public sector net borrowing rose to 15.6 billion GBP last month (2 billion GBP more than expected), as the government racked up debt to make up for a shortfall in income tax collections and an increase in spending. Hmm… Now that ain’t exactly what you want to see from a country that’s supposedly trying to cut its debt! If this keeps up, Chancellor George Osborne will have a hard time meeting his austerity target this year!
Meanwhile, the inflation report hearings brought grim news as BOE Governor Mervyn King declared that economic conditions have worsened in the U.K. in light of the euro zone debt crisis. Aye caramba! According to King, he was “struck by how much has changed” since the last time the BOE produced its inflation report.
But apparently, it ain’t just the euro zone that has King worried. He said he’s particularly concerned about worsening conditions in Asia and other emerging markets. He even added that the central bank hasn’t ruled out a possible move to slash interest rates to boost the economy.
Today, we only have a couple of second tier reports on tap. First up is the BBA mortgage approvals report due at 8:30 am GMT. Look for mortgages to rise from 32,400 to 32,800 in May. Then at 10:00 am GMT, CBI realized sales data will be released. According to forecasts, the index will probably record a fall from 21 to 12 for the month of June.