The pound remain under pressure against most of its major rivals on speculation that the Bank of England will keep interest rates at a record low in order to support anemic economic growth. Minutes from the central bank’s June meeting, released last week, showed officials voted 7-2 to hold interest rates at 0.5%, while some members expressed the need for more bond purchases. Sterling also came under pressure on Friday after BoE Governor Mervyn King said the euro-area debit crisis pose the biggest risk to the stability of the UK financial system. Separately, the overnight Hometrack release showed that UK house prices fell for a second consecutive month in June as growth in the supply of properties outpaced demand. The average price of home fell by 0.1% on monthly basis and was down 3.9% on year. There are no major data releases scheduled for today. MPC member Adam Posen is due to speak at a Kings College In Aberdeen at 18:00. Looking to the weak ahead, final estimate of Q1 GDP is scheduled on Tuesday with the expectations for the figure to remain unchanged at 0.5%. The consumer confidence June release on Thursday is projected to drop to –24 from –21 in previous reading. And finally, manufacturing PMI on Friday is expected to consolidate further to 52.3 in June. Expect for the pound to remain in current levels should the economic data confirm the weak expectations.
The euro dropped against the dollar during the overnight trade on concern the Greek parliament won’t approve budget cuts required to avoid the default. Greek lawmakers must approve a 78 billion euro austerity package in order to receive a loan payment and future financing. European finance chiefs will decide on July 3 whether Greece has met aid conditions. Looking ahead to this week, preliminary inflation figures and manufacturing PMI headline the economic calendar. Expect for the single currency to remain driven by events in Greece where Greek parliament votes for critical austerity plan on Tuesday.
The dollar gained across the board during the Asian session as global stocks fell and investors run for safety of the US currency. Looking ahead to this week, ISM manufacturing release on Friday headlines the economic calendar with the expectations for figures to consolidate to 51 in June from 53.5 in the previous month. Other important US data on the housing market and consumer confidence will also be released earlier in the week.
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