Daily Futures Commentary July 9, 2009

Thursday, July 09, 2009

Traders are calling for a higher opening in the September British Pound this morning. Overnight strength in European and Asian equity markets is helping to increase trader demand for higher risk assets.

After a six-day sell-off, the British Pound is attracting buyers. Fundamentally this market has been getting beat-up since June 30th when an economic report showed that the U.K. economy had its worst quarter since 1958. Since then there have been signs that the economy is improving. The service sector is beginning to show growth, housing prices have stabilized and inflation is running ahead of the Bank of England’s target.

Despite these small signs of recovery, the Bank of England is expected to leave interest rates at their historically low level of 50 basis points when it makes its interest rate announcement early this morning.

Investors do not expect the BoE to touch interest rates until they are absolutely sure the U.K. economy is well on its way to recovery. Although there are small signs of a recovery, credit issues still exist with lending to …
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