GBP has managed to outperform the other majors in early European trader with the London market taking the big 2.4% m/m rise in Rightmove's asking house prices as a fresh cue (even though there is good argument to downplay the importance of this), especially to sell EUR/GBP after the weak Euro-Zone GDP data last week. Meanwhile an op-ed article in the Daily Telegraph by Roger Bootle titled "A strong-arm policy is needed to hold the pound down on the rebound" has generated some interest. Although Bootle argues that the authorities should take measures to keep the pound at competitive levels (tighten fiscal policy first and raise interest rates last, threats of intervention etc) he sets out that sterling is particularly at risk to rallying against the EUR, the thrust of which may have ironically had more impact on the London market this morning. Other U.K. news include the IDS report that showed median pay deals are holding at two-and-a-half year lows, at 3% in the three months to March, unchanged from February. Resistance in Cable is seen at Friday's 1.5287 high and 1.5300. EUR/GBP has potential to test its early-May low of 0.8760.
Meanwhile, ECB council member Ewald Nowotny expects downward revision to growth forecast with June projections, but at the same time sees signs for the economy to bottom out. Nowotny said growth rates are likely to be low after the end of the crisis and warned that governments must consolidate budgets quickly once growth starts to recover. Nothing new in the comments and council members previously suggested that the May decisions on rates and non-standard measures already took into account expected downward revisions to growth.
