GBP
In the UK yesterday data released showed manufacturing output unexpectedly fell
in January. This was attributed to a sharp reduction in computers and
electronics. Output declined 0.5 percent after a 0.1 percent increase in
December. Total industrial production, which accounts for about 15 percent
of gross domestic product, fell 0.1 percent in January, against an estimate for
a 0.2 percent gain. The computer and electronics sector knocked 0.5 percentage

GBP
In the UK yesterday data released showed manufacturing output unexpectedly fell
in January. This was attributed to a sharp reduction in computers and
electronics. Output declined 0.5 percent after a 0.1 percent increase in
December. Total industrial production, which accounts for about 15 percent
of gross domestic product, fell 0.1 percent in January, against an estimate for
a 0.2 percent gain. The computer and electronics sector knocked 0.5 percentage
points from output. From a year earlier, production rose 1.3 percent. The
reason why industrial production didn’t fall further was a 2% rise in mining
and quarrying over the month of January. It followed a 1.4% fall in December.

Economists said the manufacturing index rose to a seven-month high in February,
and the British Chambers of Commerce raised its U.K. projections on Wednesday,
though it said the recovery remains uneven. 

The pound climbed for a seventh day against the euro, reaching its strongest
level in more than seven years.  Bank of England member Martin Weale also
spoke yesterday, stating he sees a risk of a sharp fall in sterling because of
the country’s large balance of payments deficit. Britain’s current account
deficit was equivalent to 6% of GDP in the third quarter of last year, matching
the biggest deficit on record.

EUR
Tensions between Greece and Germany increased yesterday, with reports from
Athens that justice minister Nikos Paraskevopoulos is threatening to seize
German assets to compensate Greek victims of Nazi war crimes. The German
government responded by saying it has no plans to talk to Greece about war
reparations. A spokesman for Angela Merkel said that questions of reparations
and compensation have been legally and politically resolved.

Greece yesterday successfully sold €1.3bn of Treasury bills, covering the
amount it needed to refinance a maturing issue. The issue was more costly for
the government however, with the paper sold at a yield of 2.7%, up from the
2.5% yield at a previous sale in February.

USD
The pound hit its lowest level against the dollar in 20 months, amid growing
expectations that US interest rates will rise in coming months. The
dollar has gained more than 10% against a basket of six major currencies
so far this year, led by its rise against the euro. This puts it on track for
its best quarterly performance since 1992. 

Key Announcements:
GBP – 9:30: UK Goods trade balance (Jan) expected to fall from -£10.154B
to -£9.7B
USD – 12:30:US Retail Sales MoM (Feb) expected to rise from -0.8% to 0.3%
GBP – 12:45: Bank of England Governor Carney makes a speech

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