Storm Warnings Imminent

Yesterday was a quiet day in the market with little data of note released. The morning showed a small improvement in Italian Industrial production data which came in slightly over expectations but this caused little in the way of movements with the Euro trading range bound throughout the day. Interestingly the USD weakened off slightly amidst no data in the mornings trading – unsurprising perhaps given its recent gains – but by close of business its losses against GBP and EUR were almost all but eroded closing close to its opening levels.

Today will be a much busier day as we see a number of data releases including key releases from both the UK and also the U.S. In the morning we have a raft of Eurozone data including inflation data from Spain and Italy and German wholesale price index, albeit these release are likely to have little impact. Instead the focus will be largely on the UK as we see producer, retail and house price index data released with the headline being UK inflation data at 09.30 am. With inflation being linked to any potential Interest rate increases in the UK it will be a telling result and one which may set a tone for GBP selling rates in the short-term as the UK General Election continues to shadow over the market. In the afternoon we move to the U.S for similar production and housing index data but with the main focus on the heavy hitting U.S retail sales released at 1.30pm. With a bullish growth expected (1.1% from a previous 0.6%) should the result differ we will no doubt see a swift change in rates given how much ground the Dollar has recently made and with this growth figure likely be priced in.

Will the pound benefit from a quiet day for Euro data? Can the USD re-commence its assault? Certainly with the current ongoing economic and political factors at play we are in for a stormy ride over the next few weeks and indeed months.