Market News & Insights
29 October 2013

Pound may get Revival on the back of GBP Data

EUR/USD 1.3761
GBP/USD 1.6090
GBP/EUR 1.1682 (0.8558)
EUR/CHF 1.2359
GBP/CHF 1.4438
GBP/AUD 1.6911

Economic data from the USD over the past several weeks has disappointed and yesterday’s batch did little to calm fears of a slowing US economy. Yesterday’s US pending home sales fell 5.6% in September, which is the fourth consecutive fall in as many months and now at its lowest level in 9 months. With housing typically correlated to the overall state of the economy, this falling trend in demand general acts as a warning signal for economic slowdown. However there was little in the way of a reaction in the major crosses and the USD starts the day stronger against both the EUR and GBP.

The US has a number of releases today, the two big ones coming in the form of advance retails sales and USD consumer confidence at 1:30 pm GMT. Previous retail sales for September disappointed, and today’s figure is expected to remain at .2%. With advance retail sales accounting for one third of all consumer spending today’s figure will act as a measure for consumer demand before GDP is released.

The UK had a quiet day on the data release front yesterday, but today sees a slightly busier calendar. At 10:30 am GMT we have Mortgage approvals where we expected a reading of 66.0K, the past two readings both came in above expectations and with the UK economy continuing to show signs of a healthy recovery, there may be room for further improvements here.

We also have net consumer credit out from the UK today with expectations here for a .9B increase in lending. Both releases today will give us a good indication of consumer confidence and though they may not have a significant impact on the GBP today, we can use these readings to gage future more significant readings. The pound has been coming under some selling pressure lately despite data remaining firm.

Once again we have a quiet start to the weak for the EUR with very little headline news or economic releases to drive the single currency. No news has been good news however and as long as the ECB steers clear of easing talks the single currency looks set to remain firm, especially the way its shrugged off weak data towards the end of last week.