The pound is mixed this morning, consolidating slightly against the dollar, but gaining against the euro after Moody’s slashed its long-term foreign currency debt rating on Greece. Overnight, a report from Hometrack showed that UK house prices fell by -0.1% in June for the second consecutive month, adding to the signs of weakness in the housing markets. The only economic release scheduled for today is lending data report from the BBA (British Bankers Association), with the expectations for the numbers of mortgages to have increased to 31,000 in June. Looking to the week ahead, second quarter GDP estimate headlines the economic calendar, with projections for sluggish growth of 0.2%. Some analysts believe that Q2 GDP can weight heavily on the UK currency as there is real possibility that data may show a contraction given the flat output over the past few months. Also scheduled for this week are the industrial and distributive trends releases from the CBI (Confederation of British Industry). Finally, July Gfk consumer confidence index and BoE lending data for June are both scheduled to be released on Friday.
The euro gained against the dollar on Friday after European leaders agreed to a new bailout package for Greece and expanded the role of the region’s rescue fund. European officials announced 159 billion euro in new aid for Greece on Friday, with bondholders agreeing to contribute to the package. However, single currency trimmed some of the gains during the early Monday session after Moody’s Investors Services further downgraded Greece by three steps, saying that European rescue plan for the country will amount to default. Looking to the week ahead, consumer confidence and inflation figures headline the Eurozone economic calendar. Expect for the single currency to remain volatile as debt troubles on the periphery of the euro region remain in the investors focus.
The dollar remained weak against most of its major rivals as US lawmakers failed to agree on raising the nation’s 14.3 trillion USD debt ceiling. Republicans and Democrats prepared dueling plans for raising the US debt ceiling and are unable to find a solution that requires approval from the Congress. Looking to the weak ahead, first reading of second quarter gross domestic product (GDP) headline the economic calendar with expectations for the world’s largest economy to expand by 1.6%. Also scheduled for this week are the Chase-Shiller house prices data for May, durable goods orders for June and consumer confidence numbers for July. Expect for the greenback to remain volatile for as long as uncertainty regarding the debt ceiling lingers in the air.
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