German manufacturing sentiment slumps

Today's Highlights

Sterling slips on inflation drop

German manufacturing sentiment slumps

Strong UK employment data but wages growth anaemic

FX Market Overview

Tuesday was a bad good news day for the UK economy but a bad news day for the Pound. A sharp drop in UK inflation England's plans for an interest rate hike looks increasingly at odds with their remit. The reduced likelihood of a UK interest rate hike made the Pound less attractive and it slipped against all other currencies. Traders were though given a bit of a fillip when this morning's UK unemployment data was so strong. The unemployment rate is down to 6.0% and wages growth continues to rise but the pace is slow and has slowed further. Sterling hasn't really bounced back as we thought it might and the Pound could well lose further ground as we head towards next week's Q3 GDP data.

Yesterday's European data was pretty bad news as well. German business confidence slumped into a negative index reading. That is the first such reading since November 2012 and adds more weight to the argument that the fall in German activity could well mean the Q3 GDP data reflects another dip into contraction for the whole of the Eurozone. Nevertheless, the euro is still not fully collapsing. It is difficult to know what needs to happen to cause that effect but another negative GDP figure may well be the trigger.

Thinking ahead to today, having got the UK data out of the way, we now turn our attention to the US from whence retail sales figures will emerge at 12.30 GMT. The forecasts are poor so we may well see the US Dollar retreat a little after that data. Later this afternoon, the Federal Reserve's Beige Book will be published. This regional snapshot of the economy forms part of the next Federal Reserve meeting agenda so it is very influential in policy terms.

Away from the markets, the news story that I found interesting was that of an American guy who is said to be suffering from addiction to his Google Glass device. The symptoms cited following 18 hour stints using the heads up computer device were dreaming of things connected to the screen, irritability when he was away from it and being argumentative when he was wearing the screen. Call me old fashioned but, I would suggest that if you did anything for 18 hours straight, you would display similar symptoms. So perhaps it isn't the device that is the problem but the compulsive nature of the wearer. Just a thought.