The Pound was trading higher yesterday after the release of positive manufacturing data from Britain. The Manufacturing PMI which was released at 54.1 after market economists forecasted a release of 52.1 helped boost the currency against the dollar. This release could be very significant. It is the first major data pointing at an improving British economy. The data may very well give traders a new reason to go long on the cable after traders have shunned the pound as of recent.
The cable traded at a high today of 1.6239 but has settled at the end of the trading day near its opening price of 1.6089.
Also lending strength to the Pound and its European counterpart, the EUR, were two speeches on Sunday from Fed Chairman Ben Bernanke and Vice Chairman Donald Kohn. The two policymakers reinforced the low interest rate environment that exists in the U.S. and hinted that the tightening of monetary policy could be further in the future than expected.
Today traders will want to be focused on the European CPI Flash Estimate and the U.S. Pending Home Sales. CPI is an important measure when central bankers determine where to set their key interest rate. A higher than expected CPI could be a positive for the EUR as high inflation could factor in on the decision by the European Central Bank as to when they will begin to raise interest rates. Pending Home Sales are a key data release from the U.S. and shows forward looking data for the U.S. economy.
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