GBP
Sterling had a poor outing last Friday as Retail Sales data disappointed against forecasts. Retail sales volumes rose 0.1% in January, below expectations of a 0.5% increase with year-on-year forecasts of 2.6% falling short to only reach 1.6%. Excluding fuel prices, data still disappointed as an increase of 0.1% m/m and 1.5% y/y were both below expectations. This data fell in-line with cautious consumer spending sentiment which could hinder an early Bank of England rate hike after last week's above-target inflation data.

From an early peak near 1.4150 for Cable, Sterling retreated to lows near 1.4000, whilst with support on dips against the Euro, the UK currency was resilient as the pair closed in the 1.1300s as the Euro corrected lower.

European Union’s chief Brexit negotiator Barnier expressed how the current stance the UK is taking on Brexit negotiations means the potential for a Swiss or Norwegian Brexit model is dwindling, maintaining political concerns.

Today, Bank of England Governor Mark Carney is due to speak, kicking off an otherwise
quiet economic calendar week. The next UK data is the Inflation Report Hearings come Wednesday and Q4 GDP readings on Thursday.

USD

Before the weekend, the Dollar remained under pressure, extending the established downtrend seen recently. Gradually, a modest USD buy-back kicked in ahead of the long weekend in the US, providing some support for the Dollar across the board.

With the US markets closed for Presidents Day today, it is a slow start to the week and prices are likely to be contained within Friday's ranges.

Coming up this week, the markets forecast a 1.6% month-on-month increase in existing home sales on Wednesday with Initial Jobless Claims on Thursday which should remain at multi-decade lows, consistent with the view that the unemployment rate will continue to drift lower over the coming quarters. The Federal Open Market Committee minutes from the 30-31 January meeting are out on Wednesday and should provide additional colour on what was perceived to be a marginally hawkish post-meeting statement.

EUR

European Central Bank (ECB) council member Benoît Cœuré asserted that the bond-buying programme would have to end before interest rates were raised and that policymakers were unanimous in that belief. Doubts about whether the German Social Democrats (SPD) would back a coalition deal with Chancellor Merkel also limited Euro support. The Euro held above 1.2400 against the Dollar this morning, and at 1.1290 against the Pound.

Data to watch:

24h EUR Eurogroup meeting
18:45 GBP BOE's Governor Carney speech