During early European deals on Thursday, the British pound pared its Asian session gains against the US dollar, the European currency and the Japanese yen as UK's retail sales declined to its lowest in nearly 14 years as consumers cut back their spending on dismal economic conditions. On the other hand, the British pound remained higher against the Swiss franc.
The Office for National Statistics said today that UK retail sales dropped 1.9% in February from the previous month, while economists were expecting a monthly 0.4% decrease.
From the previous year, retail sales volume rose 0.4% in February, which was the lowest growth since September 1995. Annual growth stood below 2.5% increase expected by economists.
In addition, the Office for National Statistics said that UK's total business investment declined 1.5% sequentially to GBP 34.95 billion in the final three months of 2008, revised up from a 3.9% fall reported initially.
The British pound lost ground after hitting a high of 1.4640 against the US dollar at 4:55 am ET Thursday. The pound-dollar pair is currently trading at 1.4539 with 1.439 seen as the next target level. The pair closed Wednesday's North American session at 1.4555.
The British pound that closed Wednesday's New York deals at 0.9336 against the European currency reached a high of 0.9280 at 4:50 am ET Thursday. Thereafter, the pound reversed its direction and is currently trading at 0.9337 versus the euro. The next downside target level for the British currency is seen around 0.947.
The German GfK consumer confidence report for April, French March consumer confidence index, Italian March business confidence and trade balance data for February, Euro-zone M3 money supply for February, which were released today likely influenced the euro.
The overall consumer confidence index is forecasting a value of 2.4 points for April, down from a revised 2.5 points reported in March, a survey conducted by the GfK market research group showed today. Economists were expecting a reading of 2.5 for April.
The French statistical office INSEE said that its consumer confidence indicator was stable at minus 43 in March. The expected level was minus 44.
Italy recorded a trade deficit of EUR0.72 billion with the non-EU countries in February, lower than a deficit of EUR1.31 billion recorded in the previous year, a report by the country's statistical agency ISTAT said today.
Eurozone M3 money supply rose 5.9% on a yearly basis in February, a report from the European Central Bank showed Thursday. Annual growth slowed from January's 6% increase. However, the growth rate stood above 5.5% rise expected by economists.
Italian economic think tank ISAE said its business confidence indicator fell to an all time low of 59.8 in March from 63.2 recorded in February. Economists had expected a reading of 63.
Against the Swiss franc, the British currency edged higher during early deals on Thursday. At 6:25 am ET, the pound-franc pair reached a high of 1.6431, compared to 1.6228 hit late New York Wednesday. If the pair gains further, 1.704 is seen as the next target level.
The sterling showed strength against the Japanese yen during Thursday's early deals. At 3:35 am ET, the pound-yen pair climbed to 143.61, compared to Wednesday's closing value of 142.00. Thereafter, the pair lost ground and is currently quoted at 143.09. On the downside, 139.2 is seen as the next target level.
The Bank of Japan said that corporate service prices in Japan were down 2.6% year-over-year in February. Forecasts called for a 2.5% year-over-year drop after the 2.2% annual decline in January. On a monthly basis, corporate service prices inched higher by 0.2%.
Traders now look forward to the New York session, in which the US Bureau of Economic Analysis is due to release its final fourth quarter GDP report at 8:30 am ET. The report is likely to show that the U.S. economy contracted by a 6.6% rate in the quarter.
At the same time, the Labor Department is due to release its customary weekly jobless claims report for the week ended March 21st.
Various Fed officials are scheduled to speak today. Treasury Secretary Timothy Geithner is scheduled to testify on financial regulation reform before House Financial Services Committee in Washington at 10 am ET.
Dallas Federal Reserve Bank President Richard Fisher is due to speak to students as part of the ninth annual Redefining Investment Strategy Education Forum at the University of Dayton at 12 pm ET.
Richmond Federal Reserve Bank President Jeffrey Lacker is scheduled to be the keynote speaker for the 2009 Economic Outlook Conference and luncheon of the Charleston Metro Chamber of Commerce, in Charleston, South Carolina at 12:40 pm ET, while Minneapolis Federal Reserve Bank President Gary Stern would speak at a luncheon of the Economic Club of Minnesota in Minneapolis on Better Late Than Never: Addressing Too-Big-To-Fail at 1 pm ET.
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