The EUR rallied yesterday against the dollar as gains in global stock markets lifted risk appetite and prompted traders to pare back bets against the single euro-zone currency. The EUR moved further away from a recent four-year low to trade above $1.2250, its highest in more than a week. Stronger-than-expected euro zone industrial output further boosted the currency. Euro zone industrial output in April surged year-on-year more than in any month in almost two decades, reassuring investors the recovery could be gathering pace.

Sterling pound was also given a boost against the dollar as the UK's newly created Office for Budget Responsibility said it expected government borrowing to fall slightly faster than originally thought. The pound was up around 1.3% versus the dollar at $1.4740 and outpaced the EUR slightly to trade at 82.95 pence.

Today, there is plenty of economic news coming out of both Britain and the euro-zone that will determine the GBP and EUR levels by the end of today's trading. From the EU, there is the German ZEW Economic Sentiment figure. From Britain, the most important news will be the CPI figure and Inflation Report Hearing. All of these news events will be important in helping set the strength of the GBP and EUR in this week's trading.