Mixed Data Leads to Mixed GBP Performance

Mixed economic data has led to mixed performance in the British pound. The currency lost value against the US dollar but strengthened against the Euro and Japanese Yen. Even though manufacturing sector PMI was slightly weaker than expected, the CBI distributive trades survey hit the highest level since May 2004.

The CBI index is a measure of short term trends in the UK retail and wholesale distribution sector, which makes it just as important as the PMI index. Meanwhile tomorrow we are expecting construction sector PMI, mortgage approvals and consumer credit. These numbers should confirm the overall health of the housing sector. As long as it remains stable and money supply continues to grow, the Bank of England is on track to raise interest rates later this month. This should keep the GBP/USD hovering close to 2.00. If data disappoints however, traders will begin to question whether the central bank will really follow through with the May 10th rate decision.