The British Pound continued its firm tone after some house price data showed a 0.9 pct rise month on month and a slight dip in mortgage lending. This obsession that many very senior and otherwise sage market traders and economists have with house prices in the UK is worrying. When will they get the message that the Bank of England is not worried about house prices? They are following the ECB model, where the only real criteria of concern is inflation. The economic cycle is treated as a necessary evil. Look back over the history of the Bundesbank - the spiritual predecessor to the ECB. Higher housing prices are a political problem, and as we know, the Bank of England is independent. Today’s gripe is now over.
Currency markets are quiet, with many forex traders waiting for the Federal Reserve Chairman’s speech this evening. Mr Bernake will speak at 12.00 midnight GMT. Leading Economic Indicators at 15.00 GMT are unlikely to provoke too much of a fuss. Later on in the week we have: US PPI data tomorrow, and Durable Goods data on Friday, as the major market focus. Stock markets continue to rise, underpinned by strong M & A activity.