The British pound experienced a choppy day of trading between 1.97 – 1.98, as GfK consumer confidence dropped to a more than 18-year low of -29 from -24.
Conditions in the UK economy are increasingly looking like that of the US, especially givent the sharp slowdown in the UK housing sector. While this is surely of concern to the Bank of England’s Monetary Policy Committee, they are expected to leave rates steady next Thursday at 5.00 percent as rocketing inflation pressures prevent the them from focusing on tighter credit conditions and the collapse of the UK property markets. Since the MPC is anticipated to leave rates unchanged, they are unlikely to issue a monetary policy statement, which should leave the market’s reaction to the news very muted.
