The British pound has been pushed strongly today by the better than expected release of UK PMI manufacturing index of July which reach the expansion territory above 50 for the first time since March 2008 at 50.8 and it was expected to be just 47.7. The cable got over 1.68 after the data and there can be a close try for getting above 1.7 later this week amid the current improving of the investors' risk appetite which weighing on the greenback since the release of US Q2 GDP advanced reading which has shown a contraction in a slower pace than expected by just 1% and the market was waiting for a shrinking by 1.6% after the first quarter drop by 5.5%. By god's will, we wait later this week for the MPC meeting and these figures may stave off further easing steps of the BOE current quantitive easing policy. In the MPC recent meeting, the market has been shocked by The BOE decision to not add more than the £125bn already authorised satisfied by just announcing the probability of reviewing this amount in this coming meeting.
The EU July PMI manufacturing index came slightly better than expected at 46.3 and it was waited to be 46 and the single currency is trying hardly right now to get over 1.43 versus the greenback joining the British pound gains but it is still depressed by the dovish release of Germane retail sales figure of June which declined by 1.8% m/m and they were expected to increase by .4%. The single currency is still undermined by EU HICP flash release of July last Friday which came down to -6% negatively impacted by the recessionary forces by the ECB meeting next Thursday By God's Will. Trichet has downplayed the risks of the deflation in his recent 2 consecutive press conferences of the ECB meetings expecting the inflation to be from 0.1% to 0.5% in 2009 and it looks that there can be a change of this talking about the deflation risks which can encourage the ECB to take further easing steps to encourage the borrowing which can effect negatively on the single currency.
By God's Will, It is important to wait today for the US ISM manufacturing index which is waited to get better to 46.2 from 44.8 in June.