Pound Under Pressure As UK Industrial Expectations Tumble

 | Jul 22, 2014 11:43AM ET

GBP/USD has posted slight losses on Tuesday, continuing the downward trend which started late last week. In the North American session, the pair is trading in the mid-170 range. On the release front, British CBI Industrial Order Expectations dropped sharply in June and was well off expectations. Public Sector Net Borrowing improved and beat the estimate. In the US, Thursday's data was a mix. CPI posted a weak gain as the key inflation index continues to struggle. Meanwhile, there was excellent news on the housing front, as Existing Home Sales exceeded expectations and hit its highest level in eight months.

US inflation numbers continue to struggle. Core CPI posted a paltry gain of 0.1%, shy of the estimate of 0.1%. The key index has looked anemic in 2014, with its highest gain this year at just 0.3%. CPI 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.

In the UK, CBI Industrial Order Expectations was awful, slumping to 2 points in June, compared to 11 points a month earlier. This was well short of the estimate of 9 points. There is some concern about the health of the UK manufacturing sector, as Manufacturing Production posted a sharp decline in June. There was better news from Public Sector Net Borrowing, as the deficit narrowed last month to GBP 9.5 billion, beating the estimate of GBP 10.3 billion.

Recent US data has been mixed, but employment numbers continue to shine. Last Thursday, Unemployment Claims dropped slightly to 302 thousand, beating the estimate of 310 thousand. This figure marks a seven-week low, as the economy continues to churn out impressive employment data. With Janet Yellen telling Congress last week that a rate hike could be pushed forward if inflation and employment data exceeds expectations, improving employment data will put more pressure on the Fed to raise rates.