Reason for sterling's weakness yesterday...
An unexpected drop on factory output prices is the reason for sterling's weakness yesterday. Factory prices (ie. prices for finished goods) declined 0.1% on the month, versus expectations of a 0.2% rise. This suggests that inflation may not be gathering pace as as some had feared, and the inflationary pressures are still limited to energy related products. For example, the price of scrap steel actually fell 16% on the year. The overall costs of raw materials rose by 0.3%, but the fall in factory prices suggests that producers are not attempting to pass on this cost to the consumer.
German GDP (Gross Domestic Product measures total economic output in an economy) rose 0.6% for the third quarter of 2005, versus expectations of 0.5%. This does not appear to be having any impact on the Euro.
Italian GDP is released at 09:00
UK Retail Price Index at 09:30 will be closely watched today for confirmation that secondary inflation is not becoming evident in retail prices.
Plenty of US data at 13:30 with PPI being the most important.
GBP EUR - Support 1.4815, 1.4800 then 1.4780
Resistance 1.4880 then 1.4910
GBP USD - Support 1.7340, 1.7324 then 1.7270
Resistance 1.7400, then 1.7517
DATA: UK RPI at 09:30
US PPI, Empire manufacturing and Retail Sales at 13:30
Posted at: 09:09
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