GBP

Martin Weale, a Bank of England policymaker, has warned
UK households to expect an interest rate rise in spring 2015. 

It is the first time a senior Bank policymaker has given a
timeframe to expect the first rise in interest rates, which have been on hold
at an all-time low of 0.5% since March 2009.

He did however mention that rates could rise even sooner
if wages continue rising.

GBP

Martin Weale, a Bank of England policymaker, has warned
UK households to expect an interest rate rise in spring 2015. 

It is the first time a senior Bank policymaker has given a
timeframe to expect the first rise in interest rates, which have been on hold
at an all-time low of 0.5% since March 2009.

He did however mention that rates could rise even sooner
if wages continue rising.

CBI survey figures showed a positive picture of UK
manufacturing.

Also figures published by the Society of Motor
Manufacturers and Traders showed the number of cars built in the UK fell
overall by 0.3% in January. However the numbers built for exports rose by 1.2%
to 103,380; which is a bit of a surprise given the rising value of the pound.

USD

The dollar rose versus most major counterparts this week
on bets the Federal Reserve will continue to reduce stimulus at a pace of
US$10bn per month, a practice which we would expect to strengthen the US
dollar.

Investors have been dismissing lower than forecast U.S.
economic data over the past two weeks, pointing to harsh winter weather as a
reason for unexpected weakness in US data.

Fed officials seem to be speaking with one voice that the
barrier to ceasing tapering is pretty high.

Asian stocks rose, with the regional benchmark index
rebounding from its biggest drop in two weeks, after a larger-than-forecast
climb in a measure of U.S. manufacturing tempered concern about global growth.

Futures on the S&P 500 advanced 0.3 percent today.
The measure yesterday gained 0.6% after the Markit Economics preliminary index
of U.S. factory activity increased to 56.7 in February, and data showed fewer
applications for unemployment benefits last week.

EUR

Data from the Eurozone generally disappointed yesterday
with services and manufacturing in the Eurozone marginally reducing for the
month of February. There was a similar story from both Germany and France also causing
the euro to weaken across the board

Today

UK retail sales figures are released this morning.
Changes in retail sales are widely followed as an indicator of consumer
spending, which makes up a large proportion of UK economic growth. The data is
forecasted to show sales in the UK fell by 1% for the month of January, thus we
could see more sterling weakness today.

We are also expecting Canada’s inflation figures to be
released this afternoon with the rate set to increase to 1.3%; which should
allow the Canadian dollar to be supported.

Key
Announcements:

9.30am – GBP – Retail Sales (Jan): Expected to fall by
1%.

13.30pm – CAD – Consumer Price Index (Jan): Expected to
rise to 1.3%

13.30pm – CAD – Retail Sales (Dec): Expected fall by
0.4%.

15.00pm – USD – Existing Home Sales (Jan): Expected to
fall by 4.3%.