Snapping a four-day rally, the British pound retreated from its 26-year high versus the greenback after softer-then-forecasted UK retail sales were reported for June. Cable hit session lows of $2.0496, falling 20 points after the news of muted consumer spending hit the wires.
[B][U]UK Headlines:[/U][/B]
[B][I]Fed Chief Says Subprime Losses Could Hit $100bn[/I][/B]
The Fed chairman said: “There clearly will be some significant financial losses associated with defaults and delinquencies on these mortgages.” Mr Bernanke also cautioned Congress against legislating narrowly on China?s exchange rate, rather than addressing this in combination with the need for structural reform.
http://www.ft.com/cms/s/3188b074-3608-11dc-ad42-0000779fd2ac.html
[I]-Source: Financial Times[/I]
[B][I]U.K. June Retail Sales Increase for a Second Month[/I][/B]
U.K. retail sales rose for a second month in June as shoppers bought more goods at department stores, a sign consumers have yet to feel the impact of five interest-rate increases in the past year. Bloomberg - Are you a robot?
[I]-Source: Bloomberg[/I]
[B][I]Russia Expels Four British Diplomats[/I][/B]
Russian President Vladimir Putin said on Thursday he believed relations with Britain will develop normally despite what he called a “mini-crisis” after tit-for-tat diplomatic expulsions. “I think relations between Russia and Britain will develop normally because both countries are interested in this,” said Putin in his first comments on the row since Britain announced it was expelling four Russian diplomats.
Russia expels four British diplomats | Reuters
[I]-Source: Reuters UK[/I]
[B][U]UK Market Activity:[/U][/B]
[I][U]Currency Markets:[/U][/I] [B]GBP[/B]
Snapping a four-day rally, the British pound retreated from its 26-year high versus the greenback after softer-then-forecasted UK retail sales were reported for June. Cable hit session lows of $2.0496, falling 20 points after the news of muted consumer spending hit the wires. Printing a rise of 0.2 percent month on month instead of the 0.3 percent economists had expected has many financial market participants speculating that current monetary policy is beginning to gain traction and dampen consumption. In conjunction with slowing retail data, M4 money supply growth also yielded sub-par results as BoE Governor King stated on Western Morning News that “inflation is likely to drop further but we have to wait and see.” Cable trades at $2.0492 in the Wall Street afternoon, as traders begin to pare back their bets on a further move to 6.00 percent by years end.
[I][U]Equity Markets:[/U][/I][B] FTSE 100[/B]
UK blue chips rallied for the first trading session of four as FTSE heavyweight Vodafone Group reports upbeat guidance. The benchmark index closed 1.10 percent higher at 6640.20 on the back of the Vodafone announcing that their subscriber growth had swelled 4.1 percent in the first quarter adding 9.1 million subscribers in the three months through June. The news sent shares of the world?s largest mobile-phone company up 2.3 percent to 161.4 pence. Rising Shanghai copper prices and supply concerns bolstered mining sector stocks adding 2.4 percent to BHP Billiton and 2.5 percent to Rio Tinto, closing at 1479 and 3764 pence respectively.
[I][U]Fixed-Income Markets:[/U][/I] [B]10-Year Long Gilt[/B]
Global government debt yields are seen marginally firmer across the board. Yields on the ten-year gilt were unchanged at 5.402 percent, signaling a possible mixed interest rate sentiment between debt traders. Many fixed-income analysts expect bond prices to rally on the news that inflation in the UK might be moderating and could settle within the central bank?s 2 percent comfort zone.
