The British pound that showed strength in Friday's Asian trading gave back its gains in early European trading ahead of UK's fourth quarter GDP and current account reports, which are expected at 5:30 am ET.

The current account deficit is estimated to decline to GBP 5.9 billion from GBP 7.7 billion in the third quarter.

According to an earlier estimate, the British economy contracted 1.5% sequentially in the fourth quarter of 2008 and dropped 1.9% annually. Economists expect the ONS to maintain its initial estimate.

The pound dropped to 1.4430 against the US dollar and a 2-day low of 1.6228 against the Swiss franc by about 2:30 am ET Friday, moving down from its early highs of 1.4497 and 1.6324, respectively. The pound-franc pair closed yesterday's deals at 1.6295 and the pound-dollar pair at 1.4455.

In the New York session today, the US personal consumption expenditure report is due out at 8:30 am Eastern Time. Analysts expect the headline figure to rise modestly to 0.8 percent from 0.7 percent increase in January.

Additionally, the final reading of the University of Michigan's consumer sentiment index for March is due to be released at 10 am ET. The report is expected to show that the consumer sentiment index rose to 56.8 from February's 56.6.

Against the currency of Europe, the pound declined during early deals, falling to a 4-day low of 0.9409. This may be compared to Thursday's closing value of 0.9361. On the downside, the next likely target level for the UK currency is seen around 0.948.

At 6.00 am ET, the Eurostat is scheduled to issue Eurozone industrial new orders for January. Industrial new orders are expected to plunge 28.4% in January from the previous year versus 22.3% decrease in December.

The pound edged up against the Japanese yen during Friday's Asian trading. However, the pound started weakening in the early European deals and is now trading at a 2-day low of 141.29, which may be compared to its early high of 143.03. At yesterday's New York session close, the pound-yen pair was quoted at 142.72.

A government report said that consumer prices in Japan posted little or no change for the year to February. The reported said that its core consumer price index was unchanged in February from one year earlier, while the overall CPI was down 0.1 percent on year.

The data showed overall inflation was down 0.3 percent compared to one month earlier.

Another report said that retail sales in Japan plummeted by 5.8 percent in February when compared to a year earlier. The decline was the sharpest in 7 years and the 5th straight month of lower retail sales.

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