The pound dropped across the board after the Bank of England minutes release yesterday showed that more policy makers voted to keep interest rates at record low 0.5% in June. BoE Governor Sir Mervyn King and other six members of the Monetary Policy Committee voted for no change, while Adam Posen kept up a call for more bond purchases. Looking ahead to today, the CBI Distributive Trades survey for June headlines the economic calendar, with the expectations for the sales balance to drop to 13 from 18 in May, reflecting further downbeat reports from retailers. Also scheduled for today is the British Bankers Association (BBA) release for lending and deposit data for May. With light economic calendar in Britain expect for the pound to remain driven by market risk aversion.
The euro is mixed this morning, gaining against the broadly weaker pound, but consolidating against the dollar before the European Leaders meet today in Brussels to discuss Greece’s financing as the country struggles to hold off default. Many investors believe that Greek PM George Papandreou will face difficulty in getting parliamentary approval next week for the new package of austerity measures, required to get a second round of financial aid. On the data front, preliminary purchasing managers index (PMI) for the Eurozone headlines the economic calendar, with the expectations for the figures to consolidate in June.
The dollar gained across the board during the overnight session after the Federal Reserve damped speculation of additional stimulus at a policy meeting yesterday. FOMC officials decided not to expand 600 billion dollars quantitative easing program when it expires this June. They also cut the growth forecasts for next two years and raised estimates for the unemployment rate. Scheduled for today new home sales for May headline the economic calendar, with the expectations for the figures to drop to 310K from 323K in the previous reading.
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