The British Pound sold off, momentarily trading under the $1.7400 figure, but then recouped most of its losses during the London trading session. During a day void of any significant economic events or releases out of the U.K., Cable showed jitters the day before the disclosure of the BoE minutes. GBP/USD traded at $1.7425 at 09:40GMT.
With no major market-moving data coming out of the U.K., the Pound painstakingly defended the $1.7400 figure. The printing of the RICS housing data slightly higher than expectations provided mild support to Cable bulls. Sterling traders will turn to tomorrow’s BoE minutes to better understand the central bank’s outlook on the U.K. economy and to gauge any hints they possibly can about the fate of interest rates after the August 4th meeting.
In equities, stocks climbed higher in early trading, helped by M&A transactions and performance assessments. Shares of SABMiller- a major brewer- gained 3.8 percent after it agreed to buy a Colombian rival for about $7.8 billion. Hilton Hotels also stood to benefit from a 1 percent gain as Goldman Sachs upgraded the hotel chain to “outperform.” The FTSE 100 was up 11.6 points to 5,225.8 by 07:15GMT.
The two-year Gilt, the most interest-sensitive treasury in the U.K., rose 3bp to 4.09 percent early this morning. The gains came after speculation that the recent rally in government debt has already reflected a slowing economy, thereby suggesting that the likelihood of an interest rate cut by the BoE is beginning to be priced into the market.