EURO\/GBP – 1.1886
US$\/GBP \u2013 1.6021
CHF\/GBP \u2013 1.5570
CAN$\/GBP – 1.5818
AUS$\/GBP \u2013 1.5998
ZAR\/GBP \u2013 11.7210
JPY\/GBP \u2013 133.89
HKD\/GBP \u2013 12.4931
NZD\/GBP \u2013 2.1195
SEK\/GBP \u2013 10.4079
US$\/EURO – 1.3471<\/p>\n
Sterling\u00a0was firm yesterday ahead of a big day of data releases in both the\u00a0UK\u00a0and euro zone. We have\u00a0UK\u00a0consumer inflation, euro zone GDP and\u00a0US\u00a0manufacturing data. In the\u00a0UK, inflation is expected to break the 4% barrier \u2013 up from 3.7% in December. What is uncertain though, is the extent of the recent VAT increase. If this has already been passed on by retailers, then the impact on inflation will not have been so great. Inflation is still in line with the Bank of England\u2019s expectations, with Mervyn King expecting it to peak at around 5% before dropping back off. Tomorrow\u2019s Quarterly Inflation Report should give a clearer picture of the Bank\u2019s expectations and intentions for monetary policy.<\/span><\/p>\n <\/span><\/p>\n In the euro zone, the euro hit a 3 week low against the US dollar on fresh fears over the region\u2019s banking system. Markets are starting to realise that there is no \u2018silver bullet\u2019 that will fix the crisis and the increasing lack of a solution is taking its toll on the single currency, despite European Finance Ministers agreeing to a new fund totally \u20ac500bn from 2013. There is a wide array of data released today, with key economic sentiment data and the latest GDP figures that are expected to show 0.4% growth in the region for last Quarter. With both euro GDP and\u00a0UK\u00a0inflation being released within a short while of each other we could see some significant volatility.<\/span><\/p>\n <\/span><\/p>\n In the\u00a0USA, the focus will be on January retail sales figures and the Empire manufacturing survey \u2013 both of which are released later on today. Both are expected to show large improvements, and as such could see increased support for the US dollar.<\/span><\/p>\n <\/span><\/p>\n Elsewhere, Chinese inflation accelerated at a slower rate than expected overnight, coming in at 4.9% against an expectation of 5.4%. This helped higher yielding \u2018commodity related\u2019 currencies, as\u00a0Chinawill not necessarily need to step in to cool its economy down. As such, imports of commodities are likely to remain at similar levels \u2013 boosting demand for currencies such as the Australian dollar.<\/span><\/p>\n