In early European session on Wednesday, the British pound plummeted against its major counterparts despite a rise in regional stocks. The pound fell to a 2- 1/2 -month low against the franc, fresh multi-week low against the yen, 5-day low against the dollar and a 2-day low against the euro.
Despite a slide in Asian stocks on growing pessimism over the prospects for global economic growth, the European stocks opened higher today.
U.K.’s benchmark FTSE 100 index is currently trading at 4,947.64 – up 33.46 points or 0.68% over its previous close.
In economic news, the price of a typical U.K. property increased by a seasonally adjusted 0.1% month-on-month in June, following a 0.5% rise in May, the Nationwide Building Society said today. Economists were expecting the growth rate to slow to 0.3%. House price annual inflation eased to 8.7% from 9.8% in May. The expected increase for June was 9%.
Earlier in the day, a survey report by the market research group GfK NOP showed that sentiment among British consumers weakened further in June on the back of growing concerns over government spending cuts and tax hikes in the run up to the emergency budget unveiled by the new government.
Marking its fourth consecutive decline, the consumer confidence index shed a point to reach minus 19 in June, a survey by the market research group GfK NOP showed. Economists were looking for a slightly weaker reading of minus 20. The reading stood six points higher than a year ago. The June reading is the weakest since the minus 25 recorded in August last year.
The pound fell against the dollar in early European deals on Wednesday. The pound-dollar pair that closed yesterday’s trading at 1.5064 is currently trading at a 5-day low of 1.4983 with 1.486 seen as the next downside target level.
During early European deals on Wednesday, the pound weakened against the yen. As of now, the pound-yen pair is trading at a fresh multi-week low of 132.73, compared to 133.46 hit late New York Tuesday. The next downside target level for the UK currency is seen at 130.5.
Japan’s housing starts declined 4.6% year-on-year in May, reversing a 0.6% rise in April, the Ministry of Land, Infrastructure,Transport and Tourism said in a report today. Economists were expecting an annual growth of 5% for May.
Annualized housing starts in May stood at seasonally adjusted 737,000 compared to 793,000 in April. Consensus forecast was for 810,000.
The pound declined against the euro in early European session on Wednesday. Presently, the pound is trading at a 2-day low of 0.8170 against the euro. If the UK currency slides further, it may likely target the 0.828 level. At yesterday’s close, the euro-pound pair was quoted at 0.8095.
Eurozone annual inflation eased to 1.4% in June from 1.6% in May, according to a flash estimate issued by Eurostat, the statistical office of the European Union. This came slightly below analyst forecasts for a 1.5% inflation rate.
The Italian CPI and PPI, German unemployment reports, which were also released today likely influenced the euro.
In early European deals on Wednesday, the pound dropped against the Swiss franc. The pound-franc pair is now trading at a 2- 1/2 -month low of 1.6220, compared to Tuesday’s closing value of 1.6300. The next downside target level for the pound is seen at 1.581.
Investors now look forward to the North American session, in which the U.S. ADP National Employment report and the results of the Institute of Supply Management-Chicago’s business survey – both for June are expected.