The pound is mixed this morning, consolidating against the broadly stronger euro, but gaining against the dollar before the Mortgage approvals release today at 9:30. The gauge is expected to show that British Banks granted 46,300 home loans in May, compared with 45,166 in April. Separately, Bank of England deputy governor Paul Tucker will give a speech at the BBA Annual Banking Conference today at 14:30.BoE Governor Sir Mervyn King has confirmed that the central bank is drawing up contingency plans for liquidity provision in the event that Greece defaults, in case that debit crisis spreads to other heavily indebted countries in the Eurozone. Expect for the pound to remain under pressure on short/medium term as there are no signs that the BoE is going to increase its base interest rate from 0.5% even as inflation accelerated to 4.5% in May.
The euro gained across the board this morning before the Greek lawmakers vote on the size of austerity measures needed to avert the country’s sovereign default. The single currency was also supported by speculation the European Central Bank is going to increase its base interest rates at their July meeting. ECB President Jean Claude Trichet said yesterday that policy makers are in “strong vigilance mode”, supporting the case for an interest rate hike. On the data front, Eurozone Consumer Confidence and Business Climate Indicator headline the economic calendar, with the expectations for the figures to remain unchanged in Jun.
The dollar dropped across the board during the overnight trade after report showed US Consumer Confidence dropped to a seven month low in June on concern about the outlook for jobs and wages. The sentiment index fell to 58.5 from a revised 61.7 in May, missing the expectations of a 61.0 decrease. The Federal Reserve last week kept in place record monetary stimulus to help the economy to expand through “temporary” slowdown. Looking ahead to today MBA Mortgage Applications and Pending Home Sales headline the economic calendar. The expectations are for the figures to increase slightly.
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