GBP
For the second day in a row, the UK economic calendar has disappointed as expectations were not met. UK fourth-quarter GDP readings declined to 0.4% from forecasts of 0.5% while the business investment report was unchanged, limiting annual growth to 2.1% from 1.7% previously. This was, again, below consensus forecasts of a gain to 2.4% annual growth. Finally, however, retailers were positive about forecasted March sales; the latest CBI retail sales index fell from 12 to 8.

Despite weak data, there was little impact on the outlook for policy changes and the markets were more concerned with Brexit developments, although there was no major news on that front.

The Pound did, in fact, make gains against its rivals yesterday. Cable gradually rose from late-morning to run out of steam early evening to mid-1.39s. Against the Euro, a similar story, closing at 1.1339.

USD

The US maintained the strong labour market; jobless claims fell to 222,000 in the latest week from a revised 229,000 previously. The Kansas City Fed manufacturing index edged higher, featuring a sharp increase in both raw-material and selling prices which maintained expectations of higher underlying inflation. Atlanta Fed President Bostic stated that the Fed was carefully re-calibrating a return to more normal monetary policy.

The Dollar, overall, struggled to sustain momentum seen following the Federal Reserve minutes release with the Euro moving significantly higher from lows near 1.2260. There was resistance close to 1.2350 and the pair retreated to the 1.2300 area on Friday ahead of the Federal Reserve monetary report which could give insights into chair Powell’s testimony next week.

EUR

The Euro is higher despite German business confidence falling more than expected in February, with the Ifo economic institute reporting its business climate index fell to a five-month low of 115.4, from 117.6 in January.

Minutes from January’s European Central Bank (ECB) meeting stated that changes in communication were premature, although the committee was increasingly confident over the inflation outlook and some members wanted to drop the easing bias. The ECB reiterated that policy would evolve in a manner to avoid abrupt and disorderly developments.

There was choppy Euro trading following the release with losses quickly erased with expectations that the easing bias would be removed at the March policy meeting.

Data to Watch:

07:00 EUR Gross Domestic Product w.d.a (YoY) (Q4)
07:00 EUR Gross Domestic Product (QoQ) (Q4)
07:00 EUR Gross Domestic Product (YoY) (Q4)
10:00 EUR Consumer Price Index - Core (YoY) (Jan)
10:00 EUR Consumer Price Index (MoM) (Jan)
10:00 EUR Consumer Price Index - Core (MoM) (Jan)
10:00 EUR Consumer Price Index (YoY) (Jan)
12:00 GBP BOE Ramsden Speech
13:30 CAD Consumer Price Index (YoY) (Jan)
15:15 USD Fed's William Dudley speech
15:15 USD Federal Reserve Bank of Boston President Rosengren Speech
18:00 USD Baker Hughes US Oil Rig Count
18:30 USD FOMC Member Mester speech
18:30 EUR ECB Cœuré Speech