Stronger Economic Data Fails to Lift the British Pound

The British pound continued to sell-off despite stronger UK economic data.

Service sector PMI rebounded from 52.4 to 52.5 thanks to improvements in average prices, business activity and employment. According to HBOS, house prices also stabilized. The market was looking for prices to drop by 0.4 percent last month, but instead, they remained flat. Is the UK economy recovering? It is too early to tell, but what we do know is that the latest information will reduce the Bank of England’s urgency to cut interest rates. They are still expected to bring rates down by 25bp on Thursday, but the recent data should trigger a more neutral statement that signals a hesitancy to reduce interest rates further in the coming months. Nationwide consumer confidence, BRC shop prices and leading indicators are due tomorrow.