Daily Insight

The Pound advanced against the majors yesterday, firming 0.1% against both the Euro and the Dollar following a distinct lack of fundamental data released in the States and in Europe. The Rightmove index showed that UK house prices accelerated to the fastest annual pace for 2-years in November but it is widely anticipated that prices may of peaked following the Bank of England's decision to lift interest rates by a half a percentage point since August. In addition, a separate report on M4 Lending showed that UK money supply remained close to the 16-year high in October.

The Pound made gains in the aftermath of the figure as the continued strength in money supply supported the view that UK interest rates could potentially rise once more in this tightening cycle. The Pound may find further support this morning following a report from the Confederation of British Industry into the state of the UK manufacturing and the survey should provide some insights into the industrial sector over the past month.

The Euro made modest gains against the Dollar yesterday despite the lack of economic reports coming out of the Euro-zone. However, the chairman of the European Central Bank, Jean-Claude Trichet, reiterated his hawkish stance with regards monetary policy as he stressed that his institution remained "strongly vigilant" in assessing inflation risks, a term we have become all to familiar with in recent months as a signal that Euro-zone interest rates are set to rise once more the following month. However, there has already been some significant data released this morning as a report on French GDP showed that the economy failed to grow in the third quarter following the fastest economic expansion in almost six years in the previous three months.
Data Released 21st November

UK 11:00 CBI Industrial Trends Survey (November)

written by Adam Solomon