Soft retail sales in the UK

Sterling was a little weaker against the euro on Friday (at around 85.5p) after the release of retail sales data in the UK. They showed sales volumes fell for a third consecutive month in January, with the national statistics office noting ‘the first signs of a fall in the underlying trend (in sales) since December 2013’. Most forecasts envisage some slowdown in economic growth in the UK this year, led by a moderation in the pace of consumer spending

The euro ended the week largely unchanged against the dollar from the previous Friday at around $1.06, having traded in a range of about $1.05 to $1.07

It was a week of two halves for bond yields in core markets – they rose over the first half of the week after Janet Yellen said a hike in US interest rates will likely be ‘appropriate’ relatively soon, but fell subsequently after the ECB said it’s ‘imperative’ to maintain an easy monetary policy in the Euro area

Data due this week include flash PMIs in the Euro area (Tuesday), a second estimate of UK GDP growth in the final quarter of 2016 (Wednesday), and consumer confidence and new home sales in the US on Friday. The Fed also publishes the minutes of its late Jan/early Feb meeting (Wed)