The British pound was the day’s biggest market mover as bad news leads to more bad news in the UK. Yesterday, we had softer than expected consumer prices, which negated the big rise in producer prices. Today, the Bank of England minutes revealed a 9 to 0 vote in favor of the first rate cut in 2 years. The move was described as “pre-emptive,” but judging from the price action of the British pound, the market did not care. The minutes were more dovish than they were anticipating and the likelihood of another rate cut next year has increased. Weak economic data also continues to pour out of the UK. The CBI industrial trends balance, which measures retail sales, fell to 8 from 13 in the month of December. The expectations component fell to -5 from 11, which was the first negative reading in over a year. Third quarter GDP is due for release tomorrow but these are final figures which means that they should not be that market moving. For the time being, both fundamentals and technicals suggest that the British pound should remain one of the weakest currencies in the foreign exchange market.
