The pound gained versus the dollar and the euro after UK retail sales unexpectedly rose for a second month in January. Sales including fuel rose by 0.9% from 0.6% in December, beating the analyst forecast of a 0.3% contraction. Bank of England Governor Mervyn King said this week that the economy should “gradually” recover this year as cooling inflation helps to reduce a squeeze on consumers’ finances, but the European debt crisis will weigh on growth. Looking ahead to today, BoE policymaker Adam Posen will speak at Warwick University today at 19:00.
The euro gained against most of its major rivals on speculation EU officials are nearing to an agreement on a second bailout for Greece. Eurozone finance ministers will convene in Brussels on February 20 to discuss a second bailout for Greece that includes a debt swap agreement. Germany wants the EU finance ministers to avoid separating 130 billion euro bailout for Greece from the planned bond swap with private creditors. Expect for the euro to remain in current levels for the remainder of the week before EU finance ministers summit on February 20.
The dollar consolidated during the overnight session on signs the economic recovery in the world’s largest economy is gathering momentum. Looking ahead to today, the Conference Board’s Leading Indicators gauge (US outlook for the next three months) is expected to increase by 0.5% in January after climbing 0.4% in December. Also scheduled for today is the Consumer Price Index figures, with the expectations for the cost of living in the US to have climbed by 0.3% from December.
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