The pound fell against the dollar during the overnight trade ahead of the Retail Sales release scheduled for this morning. The gauge is expected to show that retail sales remained flat in September after dropping 0.2% in the previous month, adding to the signs of weakening economic recovery. Separately, Bank of England MPC member, David Miles, said in a report yesterday that wide range of people have seen declines in their real incomes while high inflation has created an extraordinary difficult situation. Miles said the MPC had relaunched quantitative easing to boost money supply and keep demand up in the economy regardless of the inflation reaching above 5% levels. With relatively light economic calendar scheduled for today expect for the pound to remain driven by the events on the continent.
The euro dropped during the overnight trade as Germany and France disagree over the solution strategy of ongoing debt crisis. The major stumbling point was the role of the European Central Bank, as German policymakers oppose the French idea for central bank to use its balance sheet to bolster the 440 billion euro European Financial Stability Facility (EFSF). The currency was also undermined following reports that IMF is split with ECB and EU over sustainability of the Greek debt and asking for clarification ahead of delivery of the next tranche of financial aid. Looking ahead to today, German Producer Prices headline the economic calendar with the expectation for the figure to increase by 0.2% in September, pushing the year-to-year figure to 5.5%. Additionally, German Economy Ministry presents new government economic forecast today in Berlin. Except for the single currency to remain under pressure ahead of EU summit in Brussels scheduled for this weekend.
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