Strong Housing Data Already Baked In, British Pound Sells Off

The British pound has remained steady against the US dollar while strengthening against the Euro and Japanese Yen. Even though we have been seeing disappointments in UK economic data, all of the readings remain at relatively high levels.

Today, service sector PMI fell more than expected, but in the grand scheme of things, the 57.2 print is still very strong. The high level of the British pound is certainly contributing to the slower growth. We are keeping a close on eye on whether disappointments in economic data become a more serious trend, but for the time being, the Bank of England has no reason to reconsider their plans to raise interest rates next month. There is nothing of consequence left for release on the UK economic calendar. Monday is a holiday in London, which means that some traders will opt to take Friday off for the long weekend as well. With Japanese and Chinese traders also out for vacation, the case for a volatile and thin trading day tomorrow is even stronger.