The BOE Interest Rate Statement is due on Thursday October 9th at 12:00 UK time. Following the shock 1.00% rate cut from the Reserve Bank of Australia, the BOE’s release will be more highly anticipated than usual.

Economists have been expecting a cut of 0.25% from the BOE which would reduce rates to 4.75%. However, economists had only been expecting a half-point cut from the RBA. Speculation is growing over whether we will see a coordinated, significant cut from the BOE this week and the Fed on October 29th.

This video takes a look at the short-term areas of support and resistance that may cap price action in the GBP/USD until the interest rate statement on Thursday.

Watch a higher resolution version of our UK Interest Rate Preview here.

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The National Association of Realtors (NAR) reported today that US Existing Home Sales fell by more than expected to 4.91M in August. Prices of existing homes also fell, dropping by a record amount.

It had been expected that the seasonally adjusted, annualized rate of existing home sales would fall to 4.93M in August, down from a revised 5.02M in July. Today’s data represents a 2.2% fall from last year’s sale pace. Sales are now down by 10.7% year to date.

The median price of an existing home came in at $203 100, down 9.5% from last year. This is the largest drop since NAR records began in 1999. Prices in the West make the toughest reading as they now stand at -23.9% YoY.

Inventories of homes for sale improved slightly from July’s record breaking 4 575 000 by 7.0% to 4 255 000. However, this figure still represents 10.4 months’ supply at the current sales pace.

Price action in the US Dollar is currently range-bound. As you can see from the GBPUSD below, price has remained constrained since the beginning of testimony from Capitol Hill on Tuesday. The range is likely to remain intact until traders can digest the remarks and implications concerning the proposed credit market bailout.

Trading in the GBPUSD is currently bound between the extremes of 1.8640 and 1.8469.

The US Producer Price Index (PPI) came in worse than expected for the month of August, the Bureau of Labor Statistics reported today.

The PPI for Finished Goods came in at -0.9% MoM compared to the -0.5% that had been expected. This seasonally adjusted figure compares to the 1.2% and 1.8% increases seen in July and June respectively. Today’s number represents the first downturn in wholesale inflation since December 2007.

Looking at the year-over-year numbers we can see that inflation has risen by 9.6%, 2 ticks lower than the 9.8% YoY growth reported for July.

The main contributing factor to August’s number was the sharp fall in energy prices. Month-over-month energy prices were down by 4.6% compared to an increase of 3.1% in the previous month. Food prices remained firm posting a 0.3% increase for the second month in a row.

The Core PPI, which strips out the volatile Energy and Food components, came out in line with expectations 0.2%. This means that the unadjusted yearly rate of 3.6% remains at the highest level seen since May 1991. 

Elsewhere the lesser important Intermediate Goods posted -1.0% growth for July and Crude Goods a much larger -11.9%.

Today’s data left the US Dollar slightly lower across the board. At the time of writing the EURUSD is at 1.4222 compared to the 1.4000 it had been at 24 hours earlier. GBPUSD was up to 1.7943 from 1.7577. It should be noted however that Retail Sales data contributed to these price moves also.