The pound dropped during the overnight trade after BoE’s Adam Posen said the UK economy is at “little risk of inflation” adding to speculation that interest rates may stay low in coming months. Policy maker Adam Posen yesterday dismissed the Bank of International Settlements call that central banks need to start raising rates to control inflation as “nonsense”. Looking ahead to today, final reading of first quarter GDP headlines the economic calendar, with the expectations for the growth figure to remain unchanged at 0.5%. Expect for the pound to remain driven by market risk aversion as we have fairly uneventful day on data front in Britain.
The euro gained across the board during the Asian session on speculation that Greek lawmakers will vote on budget cuts needed to prevent the country’s default. Greek Prime Minister George Papandreou called on lawmakers to obey their “patriotic conscience” and back tougher austerity measures. Looking ahead to today German inflation figures and Gfk Consumer Confidence Survey headlines the economic calendar. CPI gauge is expected to remain unchanged at 2.3% in June, while the consumer confidence survey is projected to deteriorate to 5.3 in July after reaching 5.5 in the previous reading. Expect for the single currency to remain supported against its major rivals as market participants expect for Greek Parliament to pass the latest batch of austerity measures.
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