EUR/GBP: Sharp Bearish Moves

The story yesterday was the big rally in equities following Ben Bernanke's testimony. His performance, while less dramatic than his previous outings, was judged to be generically "dovish." Despite the actual inflation data (June core CPI was up .3% and higher than expected), Fed watchers interpreted his testimony to imply that a pause was likely. The thinking seems to be that a slowing economy generally and a slowing housing sector in particular, would naturally ease inflation pressures in the short to medium term. Furthermore, the delayed effects of the last few rises would also contribute to a manageable and comfortable inflation picture. Read More....