The pound dropped across the board during the early morning session after report showed UK house prices fell for the first time in three months. Nationwide Building Society reported that the average cost of a home declined by –0.2% from March to 165,609 pounds. Sterling was under pressure yesterday after PMI Manufacturing output came out lower than expected. Worsening economic data may ease pressure on the Bank of England to raise interest rates to curb the inflation, which has soared to more than twice the central bank’s 2% percent target. It is widely expected that the BoE officials will keep the benchmark interest rate at a 0.5% at their May meeting scheduled for tomorrow. Looking ahead to today, the construction PMI for April headlines the economic calendar, with the expectations for the figure to consolidate to 55.9 from 56.4 in the previous reading. Also scheduled for today are Lending to individuals, Mortgage Approvals and Money supply figures. Expect for the pound to remain under pressure should the data surprise on the downside.
The euro rose against the pound and the dollar on speculation that the European Central Bank officials will signal further interest rate increase at their meeting tomorrow. The single currency strengthened across the board after data showed that Eurozone producer price inflation unexpectedly accelerated on the fastest pace in more than two years in March, boosting the case for further fiscal tightening. Looking ahead to today, Eurozone Retail Sales and PMI Services headline the economic calendar, with the expectations for figures to consolidate slightly. Expect for the single currency to remain supported ahead of tomorrows ECB monthly meeting.
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