Daily Insight

Lots of comment in the press over the weekend on the Euro's slide. Continuing trouble in France, ECB indecision over interest rates cited as reasons for the weakness.

Very often it is not the news itself, but the market's reaction to news items that gives the best indication of market direction. The enourmous $66Bn US trade deficit should have produced a major negative reaction for the dollar, but on the contrary, the greenback continued to rally versus the Euro. This reaction to fundamental news is very instructive, and shows the lack of appetite for the single currency.

The week ahead is crammed with inflation data, in particular the UK RPI (Retail Price Index) on Tuesday, the Bank of England Infaltio report on Wednesday and US CPI (Core Price Index), also on Wednesday. Thursday sees the release of UK Retail Sales (October) and US Industrial Production, Philadelphia Fed survey and Jobless claims.

GBP EUR - Support 1.4820-30 , 1.4800 then 1.4780
Resistance 1.4910 then 1.5000

GBP USD - Support 1.7430, 1.7400 then 1.7325
Resistance 1.7517 then 1.7600

DATA: UK Producer Prices 09:30 - This figure has a bearing on inflation. If it comes out high, the market will be looking for confirmation from the RPI on Tuesday.