The pound gained against its major rivals during morning session after Halifax house prices gauge grew the most in eight months in June. Prices increased 1.2% from the previous month, when they gained a revised 0.4%. Although June increase was the highest since October 2010 the overall prices fell by 1.6% from the previous year to an average 163,049 pounds. While the Bank of England is expected to keep its benchmark interest rates at record low throughout the 2011, mortgage approvals remain at high levels as banks tighten its lending conditions. Separately, BRC (British Retail Consortium) shop price index was released overnight, with inflation rising by 2.9% in June, up from 2.3% in May. The BRC pointed out that shop price inflation remains significantly below overall consumer price inflation. Expect for the pound to remain in current ranges as there are no economic releases or policy speeches scheduled for today.
The euro dropped across the board this morning after Moody’s Investors Service cut Portugal’s credit rating to below investment grade. Rating agency lowered the nation’s long-term government bond ratings to Ba2 (junk rating), from Baa1, stocking speculation it will need a second bailout. Looking ahead to today, German Factory Orders headline the economic calendar, with the expectations for the figures to consolidate to 9.5% in May, from 10.5% in the previous month. Expect for the single currency to remain under pressure ahead of the ECB monthly meeting scheduled for tomorrow.
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