The pound lost ground yesterday as UK mortgage approvals unexpectedly declined in October to 42,800 from 43,200 in September. The pound also came under pressure after former Bank of England policy maker Adam Posen commented that a house-price bubble may provoke a crisis in the pound.
Data from the US disappointed yesterday with pending home sales falling by 0.6% in October. Whilst negative data would tend to weaken the US dollar, the currency actually managed to gain as investors flocked to the dollar following the resolution over Iran’s nuclear programme.
The yen managed to catch some relief yesterday following the release of the latest minute from the Bank of Japan’s monetary policy meeting. The BoJ stated that there continue to be risks to the outlook for the economy as well as commenting that it was “highly uncertain” whether inflation would reach its 2% target.
Bank of England governor Mark Carney is set to be questioned by the Treasury Select Committee on its latest quarterly inflation report. Investors will be looking to take cues from comments made by Carney to gauge any changes to his forward guidance programme.
Data from the US will be scrutinised this afternoon as well with building permits, housing starts and consumer confidence all set to improve from their previous monthly figures. As long as these figures show an improvement then we would expect to see the US dollar continue its strength from yesterday.
13.30pm – USD – Building Permits (Sept): Expected to increase to 940,000.
13.30pm – USD – Housing Starts (Oct): Expected to increase to 910,000.
13.30pm – USD – Consumer Confidence (Nov): Expected to increase to 72.9.