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GBP found a short term benefacrtor in the Bank of England yesterday as the MPC’s decision not to increase their asset repurchase program saw sterling bid up in the afternoon’s trading session.

Some economists had predicted that a £50bln - £100bln extension would be sought from the Treasury. We were right in our belief however and they decided to hold off. I do believe however that they will extend in August. This sets up a month with a significant policy change hanging over GBP, a month in which we believe we will see sterling lower than current.

No change was expected in the interest rate and none came with the cost of borrowing remaining at 0.5%.

A 48 per cent rise in Chinese car sales in June and the release of better than expected May trade data from Germany both helped optimism rise over the fortunes and likelihood of a global economic recovery.

Consumer confidence figures from the US today may put the hex on this risk rally later today although PPI from the UK, due at 09.30, should see sterling ably supported.

World First’s Twitter page is up and running and we will be live ‘tweeting’ the impact of all these data releases and how they affect the markets. Click below for up-to-date news on all things currency. The address is http://twitter.com/World_First

Have a great weekend

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