Appetite for riskier assets was supported further yesterday as German industrial output surpassed expectations.

German industrial output unexpectedly rose to 1.2% in March, the largest increase in a year, surpassing expectations of a 0.1% decline. The data added to the better than expected factory orders figures on Tuesday and adds to speculation that Europe’s largest economy may be returning to growth.

Appetite for riskier assets was supported further yesterday as German industrial output surpassed expectations.

German industrial output unexpectedly rose to 1.2% in March, the largest increase in a year, surpassing expectations of a 0.1% decline. The data added to the better than expected factory orders figures on Tuesday and adds to speculation that Europe’s largest economy may be returning to growth.

The euro strengthened further off the back of the news as investors will continue to keep a close on data from the euro zone to gauge what the European Central Bank may do next to spark growth in the euro zone as a collective.

The increased risk appetite also caused the US to be sold off as both the pound and the euro attempted to breach important resistance levels that have limited further gains for both currencies.

Sterling continued to remain well supported following data from Halifax revealing that house prices rose more than expected in April.

Both the New Zealand and Australian dollar drew some relief last night as the unemployment rate in the respective countries fell to 6.2% and 5.5%. China also revealed a rise in inflation from 2.3% to 2.4% for the month of April.

The UK will come into the spot light with industrial production and manufacturing production for March due for release this morning. At noon the Bank of England is set to announce their decision on interest rates and monetary stimulus and in the afternoon we have the GDP estimate for the three months leading up until April.

Both interest rates and monetary stimulus are expected to remain unchanged with talk amongst some analysts that the BoE may refrain from further expansion of the £375bn quantitative easing program until later this year. Earlier this year, the market had been pricing in an expansion as early as May/June. As a result we may see further gains for the pound for the foreseeable future.

Key Announcements:

9.00am – EUR – ECB Monthly Report.

9.30am – GBP – Industrial Production (Mar): Expected to improve to -1.6%.

9.30am – GBP – Manufacturing Production (Mar): Expected to fall to -2%.

10.00am – EUR – Greek Unemployment Rate (Feb): Previous figure was 27.2%.

10.00am – EUR – Portuguese Unemployment Rate (Q1): Previous figure was 16.9%.

12.00pm – GBP – BoE Interest Rate Decision: Expected to remain at 0.5%.

12.00pm – GBP – BoE Asset Purchase Facility: Expected to remain at £375bn.

13.30pm – USD – Initial Jobless Claims (May 3): Expected to increase to 335,000.

15.30pm – GBP – NIESR GDP Estimate (3M) (Apr): Previous figure was 0.1%.