British Pound Edges Higher But Gains Should be Limited
The British pound edged higher against the US dollar today but the gains should be limited. In fact, the pound only rallied against the dollar as the currency lost ground to the Euro, Japanese Yen and Swiss Franc. There was no UK data released today, but the outlook for this week’s data hangs over the currency. Consumer credit, mortgage approvals and net lending are all due for release tomorrow. The housing market is the Achilles Heel of the UK economy and so far there is no respite in sight. We fully expect the housing market data to remain weak and to weigh on the British pound. For the UK, a recession could still be looming. The consumer confidence and manufacturing PMI numbers due later this week will provide more insight into whether the prospect of a recession will soon become a reality.