Pound Slightly Lower Despite Solid UK Data

 | Jul 23, 2014 01:15PM ET

GBP/USD has posted slight losses on Wednesday. In the North American session, the pair is trading in the mid-1.70 range. On the release front, BBA Mortgage Approvals met expectations, while CBI Realized Sales showed a sharp rise in June. There were no surprises from the BOE's Monetary Policy Committee votes on QE and interest rate levels, and BOE Governor Mark Carney spoke at an event in Glasgow. In the US, today's sole release was Crude Oil Inventories.

British numbers were positive on Wednesday, but the pound failed to take advantage. BBA Mortgage Approvals hit a three-month high, rising to 43.3 thousand. This practically matched the forecast of 43.4 thousand. CBI Realized Sales, which tends to show sharp movement, jumped to 21 points, compared to a previous reading of just 4 points. The estimate stood at 18 points, and was the indicator's best showing since March. There were no surprises from the BOE, as the votes on QE and interest rate levels were unanimous (9-0) decisions. Any dissenting votes in either decision could have resulted in strong movement by the pound.

US numbers were a mix on Tuesday. Inflation numbers continue to struggle, as Core CPI posted a paltry gain of 0.1%, shy of the estimate of 0.2%. The key index has looked anemic in 2014, with its highest gain this year at just 0.3%. CPI was bit stronger, as it gained 0.3% last month, matching the forecast. Meanwhile, Existing Home Sales jumped to 5.04 million, surpassing the estimate of 4.94 million. This was the best showing we've seen since October, and follows a disappointing release from Housing Starts, which was published last week.

Geopolitical tensions are bad news for the markets, which crave stability. With violence continuing in Ukraine and Gaza, nervous investors continue to eye the safe-haven US dollar, so the yen could see some pressure. In Ukraine, the downing of a Malaysian Airlines jet, apparently by pro-Russian separatists, has seriously frayed relations between the West and Russia, which have already been strained since the latter annexed Crimea. Fighting continues between the separatists and Ukrainian forces in Eastern Ukraine. The Europeans are threatening stronger sanctions against Russia, and escalating tensions in eastern Ukraine could shake up the markets. In the Middle East, the fighting in Gaza between Hamas and Israel has intensified, as Israel presses on with a land offensive and casualties rise on both sides. Meanwhile, the international community is intensifying efforts to broker a cease-fire, but in the meantime the fighting continues.