• Spain’s Zapatero: EU banks stress test results due second half July
  • Bank of England minutes: Voted 7-1 in June meeting to keep rates at 0.5%. MPC ‘s Sentance voted for 25 bps hike. First split on rate decision since February 2009, first call for rise since August 2008. MPC voted 8-0 to keep QE at 200 bln
  • Soros: Germany savings policy is a danger for Europe – paper
  • Australian PM Rudd faces possible challenge to leadership. Lawmakers are gauging support for possible challenge by Deputy PM – Sky TV
  • Australian Climate Minister: Ruling Labor Party lawmakers are “100%” behind PM Rudd
  • German GfK July consumer sentiment indicator unchanged at 3.5 from June, better than median forecast of 3.3
  • Greek FinMin: I see light at the end of the tunnel, but I understand that the average citizen does not – paper
  • Spain FinMin: Rising spreads not a problem for Spain, not worried about refinancing in July. No one can doubt our resolve to cut the deficit – paper
  • UK Chancellor Osborne: If we don’t deal with debt, unemployment will rise. Reaction to budget shows it is a credible plan
  • French June manufacturing industry business morale 95 vs 97 in May, below median forecast of 97
  • Italy June consumer confidence falls to 101.4 from 105.4 in May, below median forecast of 105.0
  • Euro zone June flash services PMI 55.4, down from 56.2 in May and below median forecast of 55.9; manufacturing PMI 55.6, down from 55.8 in May but higher than median forecast of 55.3
  • UK mortgage approvals for home purchase 36,709 in May, up from 35,964 in April, better than median forecast of 36,000. Mortgage lending +2.552 bln in May, up from +1.949 bln in April, highest since February
  • UK CBI retail sales balance -5 in June vs -18 in May, worse than median forecast of +5

Sterling strength main feature of an otherwise dull session. Cable up at 1.4910 from early 1.4820, EUR/GBP down at .8335 from early .8275. Yesterday’s budget statement has gone down well with the markets and media, if not all of the general public.

News that Andrew Sentance voted for a 25 bps rate hike at last MPC meeting and some decent housing data (see aboove) also helped lend support. Asian sovereign seen decent buyer of the GBP/AUD cross this morning. It’s advanced to 1.7105 at writing from early 1.7005.

EUR/USD at 1.2280 very marginally firmer from early 1.2265. Lacklustre trade with comments from George Soros (see above) helping stymie rally. Talk of stops through 1.2240 and through 1.2320.

USD/JPY at 90.25 little easier from early 90.50. Talk of stops just below 90.00.

EUR/CHF little changed at 1.3605. Talk of SNB on the bid down at 1.3585, but seems it was another party trying to protect barrier interest at 1.3575. Talk of another barrier at 1.3550 with stops just below there.