According to the Bank of England, the UK's economy is operating far below its capacity and unemployment is still rising. Furthermore, there is also a need to address the huge burden of debt incurred by the government as it financed its fiscal stimulus packages. Therefore any boost to sterling as a result of the GDP numbers is likely to be short-lived as attention will inevitably return at some point to these fundamental problems. Elsewhere, Germany is set to publish the IFO business climate index for October, with analysts forecasting a further improvement in Europe's largest economy.

Sterling

Disappointing retail sales data brought sterling's good run to an end, although the pound remains well-supported ahead of all-important Q3 GDP number. Official figures showed that retail sales failed to grow for the second consecutive month, confounding expectations of a 0.5 per cent increase.

US Dollar

The US dollar staged a mini-recovery as investors used disappointing data as an excuse to take profit on the greenback's recent slide. Chinese Q3 GDP data proved to be the spark that began the dollar's comeback as growth came in slightly lower than expected.

Euro

The single currency continues to be the main benefactor of weakness in the US dollar. At one point during the overnight session the euro actually hit its highest level this year against the beleaguered greenback, and also posted a 2 month high against the Japanese yen.

Japanese Yen

It has been a tough week for the Japanese yen, which is heading for a weekly decline against almost all of the major currencies. Paradoxically, the moves are likely to be welcomed by Japanese authorities because the world's second largest economy depends heavily on the country's export sector.