With the Christmas holiday period fast approaching and a light global macro calendar today, investors in currency markets are likely to remain on the sidelines. Going forward, market participants will eye the final GDP reading in the UK scheduled tomorrow to confirm if the nation’s economic growth remained strong for the third quarter.

In the Euro zone, data scheduled later today is anticipated to show an improvement in morale among consumers in the region. Considering the recent upbeat trend in German and Euro zone economic data, any improvement in the region’s confidence is likely to further ease worries among investors. Across the Atlantic, tomorrow’s revised GDP data is expected to show an upward revision for the third quarter.

Pound Sterling – UK Markets

The Pound is trading in a tight range against the majors this morning. Amid a light economic calendar in the UK today, market participants will keep a tab on tomorrow’s final GDP reading to confirm if the pace of economic growth in the UK remained robust for the third quarter. Additionally, BBA mortgage approvals data in Britain will attract some attention among investors, particularly considering the declining trend in the number of mortgage approvals of late.

On Friday, Sterling gained ground against the Euro. Data released in the UK showed that public sector debt increased less than expected for November. However, rising government debt has weakened hopes that the British Chancellor might be able to meet his spending reduction targets this fiscal year. Separately, another survey conducted by the CBI revealed that UK retail sales growth for December accelerated at its strongest pace in almost 26 years. The survey further showed that the nation’s retail sector is expected to remain well supported by the luxury goods segment this month as increasing disposable income and falling fuel prices are likely to keep domestic spending levels buoyed.

US Dollar – US Markets

In the absence of any notable economic releases on the domestic front today, the greenback is trading in a tight range against the majors this morning ahead of tomorrow’s crucial final third quarter GDP data in the US which is expected to be revised upwards as consumer spending levels and performance of services sector activity remained strong. Meanwhile, the revised Reuters/Michigan consumer confidence data scheduled tomorrow is anticipated to show a downward revision for December. Although the reading is not anticipated to show much divergence from its pre-recession highs, any downside surprise is likely to stoke concerns among investors.

In Friday’s trading session, the greenback gained ground against the Euro despite the release of upbeat data in Germany. Separately, the Richmond Fed President, Jeffrey Lacker, stated that he was satisfied with the tone of the most recent post-meeting policy statement of the central bank. He further signified the importance of domestic economic data going forward but suggested that the central bank might consider raising interest rates before inflation shows any signs of pickup.

Euro – European Markets

Data released earlier today showed that import prices in Germany declined more than expected for November for a thirteenth straight month. However, the common currency has shown little reaction to today’s data and remained range bound against the majors this morning ahead of Euro zone’s preliminary consumer confidence reading for December. The reading is anticipated to show an improvement in morale among consumers and offer another evidence of improvement in the Euro bloc’s macro trend, particularly after the release of recent encouraging German surveys and considering the upswing in Euro zone’s flash manufacturing and services PMI readings for December. Going forward, Euro investors are likely to eye the second round of voting in Greece’s parliament scheduled tomorrow, especially after the nation’s Prime Minister, Antonis Samaras, offered the pro-European independent candidates to join the government over the weekend.

The Euro lost ground against the greenback on Friday despite data released in Germany revealing that producer prices in the nation dropped less than expected for November.

Other Currencies – Highlights

The Japanese Yen continued to trade on a weaker footing against the greenback this morning after the Bank of Japan’s monthly economic survey released earlier today indicated that the nation’s inflation is anticipated to remain under pressure due to the recent drop in global crude oil prices. However, the survey further indicated that private consumption is expected to gain pace as health of the nation’s employment sector continues to improve. Separately, the survey hinted that exports from the nation are likely to increase in the near future. Considering the central bank’s optimism towards the nation’s domestic market as well as overseas markets, investors will keep an eye on Japan’s industrial activity data scheduled later this week. Additionally, a raft of Japanese economic data including consumer price inflation and the minutes of the Bank of Japan’s latest policy meeting will keep investors interested.

Going forward, traders in the US Dollar-Japanese Yen pair are likely to pay attention to tomorrow’s revised GDP and Reuters/Michigan consumer confidence data in the US for further direction.