While there is no important economic data on the agenda, UK exporters will be holding their breath as they continue to monitor sterling’s strength. Sterling is near three-month highs against the euro and remains just under five-year highs against the US dollar. British Retail Consortium retail prices rose 4.2 per cent year-on-year versus a -1.7 per cent release in March. The release, as well as a UK newspaper article, suggests that the Bank of England could be more inclined to raise interest rates. A less dovish stance within the central bank’s inflation report this week could further bolster sterling.

US dollar

The US dollar was not able to make further advances, lacking economic data and event risk, however, the outlook is a little different with the release of retail sales. Sales figures are expected to remain in positive territory but not be as strong as prior month’s data. Pent-up demand caused by severe weather conditions in the first quarter are expected to help prop up the release.

Euro

The euro continues to suffer from the fallout from last week’s policy meeting at the central bank. European exporters are relieved that any euro upside so far seems to be limited, but they should also understand that the calendar so far has been limited. The agenda heats up with the release of German ZEW investor confidence, as these are leading economic indicators. The index is forecast to show signs of weakness, partially due to the Ukraine crisis. Indeed, announcements of fresh sanctions were made and for the first time corporations were involved instead of targeting only people. Prior to the release of sentiment figures, investors will face the release of wholesale price data. The inflation figures will stand as a reminder to the forward guidance given at last week’s policy meeting. The euro could be in for a rough ride if price pressures slip into negative territory.