With a light macro calendar in the UK today, investors’ focus is likely to remain on the revised GDP reading scheduled this week. The revision is expected to confirm that Britain’s economic growth for the third quarter remained close to its pre-recession high. However, any downside surprise in the reading is likely to weigh on expectations of a sooner than expected interest rate rise in the UK.On Friday, the Euro lost significant ground against the majors following dovish comments from the ECB President. However, the German Ifo survey released earlier today showed that domestic business conditions improved for November. Across the Atlantic, the Markit preliminary non-manufacturing PMI report due later today is anticipated to attract market attention for further direction.
Public finances data in the UK showed that government borrowing dropped for October. Today’s data might have provided some relief to the UK Chancellor, considering his plans to reduce the fiscal deficit. However, Sterling failed to remain supported above the 1.57 level against the greenback, after yesterday’s upbeat UK retail sales report had lifted the Pound.Across the Atlantic, mixed economic data provided little support to the greenback yesterday. Market participants cheered encouraging US consumer price inflation data, but the optimism proved short-lived following a weak Markit manufacturing activity report in the US. In Europe, the ECB Chief continued to strengthen prospects of additional easing measures in the region, thereby weighing heavily on the performance of the Euro this morning.
Macro data released today showed that monthly retail sales in the UK rebounded more than expected for October, suggesting that consumer morale remains upbeat ahead of the upcoming holiday period. Today’s encouraging retail sales data has provided further support to Sterling after yesterday’s mostly hawkish BoE minutes lifted the Pound against its key peers.Today, weak preliminary PMI readings across key European nations showed signs of further economic troubles in the Euro zone. Across the Atlantic, consumer price inflation and Markit manufacturing PMI data scheduled later today will be watched for further clarity on the future policy stance, especially after yesterday’s FOMC minutes did not provide a clear direction on the interest rate trajectory going forward.