Positive news emerged from the Confederation of British Industry after it announced that retail sales had risen by their fastest level since June 2012. The index comfortably beat the forecasted number and gave the pound a well-timed boost ahead of the final Q2 GDP reading. Sterling is now pushing back towards last week’s highs; levels not seen since the beginning of the year, leaving importers in a great position to take advantage if they have not done so already. In other news, comments made from the US suggested that the world’s largest economy is likely to reach its debt ceiling by the middle of next month. This could trigger a bout of risk aversion if negotiations by Congress to increase the ceiling fail to progress in the coming weeks.

Sterling

After last week’s abysmal retail sales reading, many will be looking to the final GDP number for clues as to the underlying strength of the economy. With very little data set for release before the weekend, a revision to the downside could see sterling come under significant pressure as the week draws to a close. Positive trade data released by the Confederation of British industry may help to support sterling if any unwanted downward revisions are made to the growth figure.

US dollar

Some high impact data is due with US unemployment claims and pending home sales set for release. The jobs and housing markets have long been a thorn in the side of the states; with both being key to long term stability. Positive readings here could spell disaster for sterling especially if UK GDP revision is one to the downside.

Euro

The single currency is likely to take a back seat with data solely focused on the UK and US. A mixed set of results from PMI readings earlier in the week has left the euro’s position against its major rivals relatively unchanged. Furthermore, there was some surprisingly positive news from Italy after consumer confidence data rebounded into positive territory for the first time in two years. This news, alongside an increase in German consumer confidence this month, will have gone down well in the single currency area and left traders in a more risk averse mood as we head into the final quarter of this year.

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