The British pound came under pressure today after the release of July UK PSNB which have shown an unexpected increasing of the public net borrowing by 8 Bln Stg and the market was waiting for just 200 M. These data dampen the current national debit situation further putting pressure on the British pound which has found a breathing in today release of UK retail sales which rose by 3.3% y/y last month and they were expected to rise by just 2.7% after rising in June by 3.1%. The cable was already depressed by yesterday release of the MPC minutes of its recent meeting when it has surprised the market by adding further
50b Stg to its 125b Stg stimulation quantitive easing plan to make the gross of it 175b decision. This decision was expected to be unanimously but the market has been shocked by 3 members of the MPC voting for adding 75B Stg instead of just 50B Stg and one of those three was Marvin king himself. These opposing members have referred to the possibility of public confidence damage in the recovery which can flatter it suggesting that the inflation could be under the BOE target for a sustained period. The Cable is now trading again below 1.65 as the greenback has started to take the lead again after yesterday strong rally of the US stocks which put pressure on the greenback by the end of the US session.Dow has closed yesterday up by .7% with no major change of the market sentiment which is still negatively impacted by this week weak US housing data of July as the US housing starts of July came down by .1% m/m after increasing by 3.6% in June and also the building permits came down by 1.8% in July after rising by 10% in June and last week dovish consuming data of US which triggered a selling off in the equities markets specially the Asian ones which always be hurt by the dovish consuming data of US which working their economies as August University of Michigan Consumer Confidence preliminary reading was expected to get better to 68 from 66 in July and it has disappointed the market falling to 63 for the second consecutive months and these data have come a day after the weak US retails sales figures of July which have shown a broadly monthly falling by -.1% and the market was waiting for rising by .3% of this broad figure and the core figure excluding the auto sales which have fallen by -.6%. By God's Will, we wait later today for August Philadelphia Fed business survey index which is expected to get better to -2 from -7.5 in July after NY Fed Manufacturing survey release which came out in the beginning of this week improving in August to 12.08 and it was expected to be just 1 from .55 in July.
Best wishes
FX Consultant Walid Salah El Din E-Mail: snipped-for-privacy@fx-recommends.com