Daily Insight

A rather mixed bag yesterday, with sterling trading weaker after lower than expected inflation figures. Today's Bank of England Inflation Report sound gives an idea of their revised targets and view on interest rates, and will hopefully give sterling some direction.

The US PPI was also uninspiring, and the dollar reacted with the usual bout of extreme volatility before settling relatively unchanged on the day. Economists agree that despite the decline in core inflation, the Federal Reserve will still continue its measured pace of rate rises, although there is little evidence to suggest that inflation is spreading from the energy sector to other products. Retail sales fell a less than expected 0.1%.

French non-farm payrolls were slightly below expectations this morning, but the Euro has not reacted.

GBP EUR - Support 1.4780 then 1.4750
Resistance 1.4830 then 1.4865

GBP USD - Support 1.7325, 1.7301 then 1.7270
Resistance 1.7397 then 1.7497

DATA: UK unemployment and average earnings 09:30
BOE Inflation Report 10:30
US CPI (consumer price index, following on from yesterday's producer prices) 13:30
US Net Foreign Securities Purchases 14:00 (this figure came out at $90Bn+ last month versus expectations of $60Bn, which goes a long way to explaining the dollar's strength. Asian investors are the most prolific buyers of US treasuries as they seek better yields. Rates in Japan are nearly zero!)