The Pound remained relatively unchanged against eh Euro while making gains against the Dollar despite dovish comments from the Bank of England, which did little to diminish optimism about the UK economic outlook after a run of encouraging data.

The governor of the Bank of England, Mervyn King, stated that he is more concerned about the strength of the recovery than inflation suggesting that interest rates will remain low for the foreseeable future.

The Dollar declined against the Euro and the Pound following the release of worse-than-expected durable good orders. Orders fell for the second straight month in June, posting their biggest decline since August, when an increase in orders was anticipated. This data compounded fears about the struggling U.S. economic outlook.

Also to note the tone of the US Fed Beige Book and news that Governor Schwarzenegger has declared a state of emergency over California’s finances was also negative for the Dollar.

The Euro made gains against the Dollar while remaining relatively unchanged against the Pound underpinned by robust European bank earnings and solid economic data. Yesterday’s rise in German consumer sentiment, following strong Ifo and PMI surveys the previous week, boosted European recovery hopes.

Data released 29.07.10

UK      09.30 Consumer Credit (June)

UK      09.30 Mortgage Applications (June)

EU      10.00 Business Climate (July)

EU      10.00 Economic Sentiment (July)

Consumer / Industrial / Services

US      13.30 Initial Jobless Claims (w/e 24th July)