Mixed Data Does Not Help Sterling Define Trend

Today’s macroeconomic data from Great Britain was mixed (though without any really bad reports), leading to the rally of the pound versus the US dollar and the drop against the euro and the Japanese yen.

The house price balance of Royal Institution of Chartered Surveyors was at 58 percent in November, a bit above the October reading of 57 percent, but below forecast 59 percent. Both industrial and manufacturing production grew 0.4 percent in October from September, in line with forecasts, but slower than in the previous month. The trade balance deficit shrank from £10.1 billion to £9.7 billion in October, but was still above anticipated £9.3 billion.

Bank of England Governor Mark Carney was rather optimistic in his yesterday’s speech. He said:

The strength of the UK recovery and the fall in its unemployment rate suggest that the equilibrium real interest rate is now rising gradually back towards zero.

At the same time, he warned that “it is unlikely that equilibrium interest rates will return to historically normal levels any time soon”.

GBP/USD was up from 1.6428 to 1.6448 as of 19:45 GMT today, touching the high of 1.6450 intraday — the highest rate since October 2011. Meanwhile, GBP/JPY turned down from 169.64 to 168.99, retreating from 170.04 — the strongest price since October 2008, and EUR/GBP was up from 0.8360 to 0.8366, touching 0.8390 intraday.

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