Currency Focus

EUR - In EZ the news was generally positive with German retail sales and unemployment both beating expectations by a wide margin, but the data was from December - before the increase in the VAT taxes - so players took the news with a grain of salt. Overall, retail sales were still down -0.3% quarter on quarter basis, but this slowdown was anticipated and should have no impact on EZ monetary policy going forward.

GBP - UK consumer confidence released this morning showed some resilience, but GBP continues to suffer some corrective pressure and this could extend a little further in the short-term. However, 0.6650 is likely to remain intact on EUR-GBP. Support on cable is at 1.9450-1.9500.