Whilst the British Pound has weakened against the Euro (GBP/EUR) in early trading today following a stronger than anticipated German economic settlement index, it is trading close to an 8-month high against the US Dollar.
At 13:45 GMT the GBP/EUR currency pair was trading just shy of 1.1900.
Despite the fact that inflation in the UK slowed to 2.7% in August 2013 from 2.8% the previous year, the British Pound showed a small gain.
Recently, the markets have become accustomed to UK data outperforming and, as a results, there has been a renewed confidence in UK assets and companies. Consequently the British Pound has been trading higher and most of its earlier losses have been recouped.
On Wednesday, the minutes of the Bank of England’s recent policy meeting are expected to be released. Following that, it is expected that the GBP/EUR pairing may well turn bullish once more. The minutes are expected to relect the positive position taken by BoE Governor, Mark Carney, and Sterling is expected to advance accordingly.
Other UK economic news expected to be released on Thursday of this week includes domestic retail sales data.
If UK retail sales increase by 3.2 per cent in August year-on-year and beat expectations for month-on-month stagnation, the Pound is likely to head for a third week of five-day gains against peers such as the US Dollar and Euro, that despite the mid-week volatility likely to be caused when the US Federal Open Market Committee announces its decision regarding tapering quantitative easing.
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