GBP

Although there was no data out from the UK yesterday, the
pound was boosted significantly, erasing the majority of its losses from Friday
following Mark Carney’s comments on interest rates.

The market seemed to be buoyed ahead of today’s fourth
quarter GDP figures, where we are expecting to see the first full year the UK
expanded in every quarter since 2007.  

GBP

Although there was no data out from the UK yesterday, the
pound was boosted significantly, erasing the majority of its losses from Friday
following Mark Carney’s comments on interest rates.

The market seemed to be buoyed ahead of today’s fourth
quarter GDP figures, where we are expecting to see the first full year the UK
expanded in every quarter since 2007.  

EUR

Data released yesterday morning showed that manufacturers in
Germany were more upbeat that analysts were expecting with regards to business
conditions.

The German Business Climate Index rose to a 30 month high of
110.6 in January beating an expected rise of 110. The IFO Expectations Index
also rose to 108.90 from 107.40.

However markets swept aside the good data with the news
being ignored by market participants. As the broader worries of the global
economy (worries over sluggish growth in China and potentially the Fed tapering
quantitative easing further) taking out risk appetite.

USD

Mixed data from the US yesterday as Market Services PMI came
in higher than expectations, rising to 56.6 from 55.7 in January; but New Home
Sales dropped in December from 445,000 to 414,000.

Unsurprisingly movements on the US dollar were very limited,
especially ahead of the Federal Reserve meeting on Wednesday, where markets are
expecting the Fed to reduce their monthly bond buying program by US$10bn.

Today

As mentioned above, markets will be looking towards the UK’s
4^th quarter GDP figures before increasing bets on the pound
strengthening further. Expectations are for the yearly figure to have improved
from 1.9% to 2.8%, whilst quarterly on quarterly growth is expected to remain
at 0.8%.

For a guide for what the Fed may do on Wednesday, markets
will be looking at the US Durable Goods figures due for release in the
afternoon. Current expectations are for orders set to have fallen to 1.8% from
3.4% for the month of December; we would expect broad US dollar weakness should
this occur.

Key Announcements:

9.30am – GBP – Gross Domestic Product (Q4): Expected to
remain at 0.8% quarter on quarter.

13.30pm – USD – Durable Goods Orders (Dec): Expected to fall
to 1.88%.

15.00pm – USD – Consumer Confidence (Jan): Expected to rise
to 78.9.