GBP

The main talking point for the UK yesterday saw the Bank
of England’s Charlie Bean demonstrating his concerns over the effect a further
rise in the value of sterling would have on exports.

Any further appreciation of sterling, which has risen to nearly
10% in trade-weighted terms since March, ‘would not be particularly helpful in
terms of facilitating a rebalancing towards net exports’.

GBP

The main talking point for the UK yesterday saw the Bank
of England’s Charlie Bean demonstrating his concerns over the effect a further
rise in the value of sterling would have on exports.

Any further appreciation of sterling, which has risen to nearly
10% in trade-weighted terms since March, ‘would not be particularly helpful in
terms of facilitating a rebalancing towards net exports’.

Bean says exports have been “somewhat disappointing”
despite the 25% plus fall in sterling’s value in the first year and a half of
the financial crisis.

The comments clearly made traders and investors nervous
about the value of the pound with the currency dropping an average of 0.6%
across the board.

EUR

In France, the central bank predicted growth of just 0.2%
for the first quarter – unchanged from an earlier estimate and slower than the
0.3% in the final quarter of 2013.

French industrial production fell 0.2% in January from
December – a disappointment because economists had expected 0.2% growth. The
figure was dragged down by a 4.4% fall in energy production during an unusually
warm month.

In Italy, industrial production posted its strongest rise
in more than two years, gaining 1.0% in January and beating all economists’
forecasts in a Reuter’s poll.

Italian industrial output is still down about 24% from
its most recent peak in 2008.

China

China’s exports unexpectedly tumbled in February, sending
the trade balance into deficit.

Exports in February fell 18.% from a year earlier – much
worse than the 6.8% increase forecast in a Reuters poll and down from a 10%
increase in January, official figures showed.

Imports rose 10.1%, giving a trade deficit of $23bn
against a surplus of $32bn in January. However, many plants and offices closed for
long periods over the long lunar New Year holiday so the figures could have
been skewed in the short term.

Today

BOJ interest rate remained at 0.1% this morning, which is
no real surprise but Japan’s machine tool orders slowed down from 40.3% last
year to 26% year on year to February. The yen has weakened marginally following
the data

Bank of England Governor Mark Carney will be in the
spotlight today, not just over the current FX rigging scandal surrounding the Central
Bank, but also over the UK Quarterly Inflation Report. Carney, as before, will sound
the Bank’s views on economic growth forecasts, inflation and the setting of
interest rates.

Key Announcements:

10.00am – GBP – UK Quarterly Inflation Report.