British News at 30 August 2007

News from CGI for GBP that The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 2.0125 level and was capped around the $2.0185 level. Technically, today’s intraday low was right around the 38.2% retracement of the move from $2.0655 to $1.9650. The big question on traders’ minds relates to Bank of England’s monetary policy through the end of the year. Before the liquidity crisis spread from the U.S. to other countries, some hawkish BoE-watchers were calling for the repo rate to end the year around 6.25%, or +50bps higher than current levels.

Now, many traders believe the BoE’s Monetary Policy Committee will only be able to orchestrate a +25bps monetary tightening to 6.00% by the end of the year. Data to be released in the U.K. today include July money supply, consumer credit, mortgage approvals, and net lending figures along with the August CBI distributive trades survey. Tomorrow’s August GfK consumer confidence numbers will be closely watched. Cable bids are cited around the US$ 1.9885 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.6770 level and was capped around the ₤0.6785 level.