BBA Mortgage approvals miss expectations

The only sterling-specific piece of data due on Tuesday has just passed us by - United Kingdom BBA Mortgage Approvals rises to 37.3K in June from 36.1K. Analysts were looking for 38.5.

So this is a miss, but GBP appears to be immune to the outcome for now.

Focus will be on the Eurozone

"Of all the major currencies, the euro will be in center focus this week.  With manufacturing and service sector PMI reports scheduled for release along with the German IFO index, all eyes are on the performance of the Eurozone economy," says Kathy Lien at BK Asset Management.

Thus we believe the next piece of data with the ability to shift the pound euro exchange rate is due out of the Eurozone.

This afternoon sees the release of the euro area consumer confidence index for July. Despite the continuing recession, rising unemployment and bubbling political risks, the index has risen steadily since last December.

"This partly reflects falling inflation which has boosted real incomes as well as the ECB cutting its main policy rate to 0.5% to support activity. We anticipate that this upward trajectory in the index will continue, with a rise to -18.5 from -18.8 in June. Both the consensus position and our own proprietary Euro Area Risk Appetite Index, suggest the risks lie to the upside," say Lloyds Banking Group in a morning brief to clients.

Predictions for the EUR-GBP exchange rate

We look at the various technical viewpoints concerning EUR-GBP.

Trading Central see declines in EUR-GBP:

"SHORT positions below 0.8615 with targets @ 0.8575 & 0.8555. The pair is trading in a bearish channel."

KBC Markets say they are short not the EUR-GBP following on from last week's BoE Minutes:

We have the impression that last week’s retest of EUR/GBP 0.87 level was an exhaustion move and thus that the topside is better protected.

There might be quite some volatility in the run ‐ up to the August meeting.

We changed our short ‐ term bias for EUR/GBP and sell EUR/GBP into strength.

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