• UK Halifax house price index +1.1% m/m, -12.1% in 3 mnths to July vs year ago, better than median forecasts of +0.6%, -12.3% respectively
  • LLoyds Banking Group posts 1H 2009 loss of £4.0 bln, better than expected loss of £5.1 bln. Impairment losses in 6 mnths to June huge £13.4 bln, some 80% of which came from HBOS legacy assets
  • Euro zone July final services PMI 45.7, revised up from flash 45.6. Composite PMI 47.0, revised up from flash 46.8
  • UK July services PMI 53.2, up sharply from 51.6 in June, some way better than median forecast of 51.8, highest read since February 2008
  • UK June industrial output +0.5% m/m, -11..1% y/y, better than median forecasts of flat, -11.4% respectively. Highest m/m since October 2007
  • UK June manufacturing output +0.4%, -11.7% y/y, better than median forecasts of -0.1%, -12.1% respectively. Highest m/m since January 2008
  • Euro zone June retail sales -0.2% m/m, -2.4% y/y, weaker than median forecasts of +0.3% , -2.2% respectively. May data revised to -0.5% m/m from initial +0.4%, to -3.0% y/y from initial -3.3%
  • PBOC reaffirms commitment to accomodative monetary policy in China

Sterling strength is the main feature of this morning’s trade, GBP/USD up at 1.7030 from an early 1.6940, while EUR/GBP is down at .8470 from around .8505.

It hasn’t all been one way traffic though. Intially cable came under pressure. Having started out around 1.6940 cable fell to a session low 1.6903. China was reportedly a notable seller in this early move, while a UK clearer was seen buying around the lows.

The overnight release of Nationwide consumer confidence data, showing a rise to 60 in July from 59 in June, the highest read since May 2008, provided sterling with some support.

The currency then garnered more support from stronger than expected Halifax house price data (see above) and to a much lesser extent the fact LLoyds numbers weren’t as bad as feared (see above)

Cable was already rallying nicely (around 1.6960) when the release of better than expected services PMI data and industrial/manufacturing output data (see above) lifted the pairing up to 1.7008, just shy of noted option barrier interest at 1.7010.

There followed a sell-off back below 1.7000 which didn’t entend very far and cable was soon back above said level, taking out the barrier option interest, triggering stops and reaching a session high of 1.7042 so far.

Traders will also have noted a Bloomberg article stating that a majority of gilt traders see the Bank of England calling a halt to QE tomorrow.

EUR/USD at 1.4425 is a little firmer on the day. Having started out around 1.4410 the pairing initally came under pressure, with China said to be a seller. There were reports then of an Asian sovereign (which one we don’t know) buying around 1.4385, but that didn’t stop the pairing reaching a session low 1.4369 before recovering.