To the UK, despite a drop in equity markets at the opening bell, sterling rebounded from its post GDP lull as a member of the BoE's monetary policy committee Andrew Sentance suggested the preliminary fourth quarter growth of 0.1 per cent may see a higher revision, stating indicators from the labour market, business surveys and measures of retail spending continue to suggest that recovery started earlier and may have been stronger than the provisional GDP estimates currently suggest. Tuesday's GDP result showed the UK economy resumed growth in the fourth quarter, albeit less than expected. Although it represents an exit from a state of recession, growth of 0.1 per cent fell short of 0.4 per cent estimates, which represents an annual contraction of 3.2 per cent.
Locally, the Aussies dropped off below 90 US cents overnight to current level of 89.5 US cents despite printing slightly stronger than expected inflation data in domestic trade yesterday. Consumer Price Index data came in ahead of expectations, recording 0.5 per cent growth in the fourth quarter to represent an annual inflation rate of 2.1 per cent. The ensuing minutes saw the Aussie make an immediate 20 pip surge and continued its upward trajectory to highs of 90.45 US cents. This in conjunction with a slew of recent economic feedback certainly heightens the chances of a rate hike and we can expect the interest rate conjecture to continue ahead of RBA rates decision on Tuesday.