Will we see the BoE devalue GBP today?

To the UK first where it was a largely range-bound day for GBP. . It wasn't until the FOMC minutes at 19:00GMT that we saw a little shake up. GBP/EUR hung onto low 1.21’s, but more importantly, reached a one month high of 1.6820 against the Greenback. In what are strange market conditions the Pound is proving resilient, even with a mixed bag of positive and negative data.

Yesterday saw the release of medium impact Trade Balance, the outcome, which although positive on the face of it, shows that Britain’s exports in goods slumped 1.6% to £23.5bn in February. This is the lowest since November 2010. The UK Govt have outlined that they are seeking to boost exports to rebalance the economic recovery away from consumer spending which has been the main driver of its surprising strong economic recovery over the past year.

The overall trade deficit, including Britain’s surplus in services narrowed to £2.1bn in February from January’s £2.2bn. The UK trade deficit is the measure of the difference between the values of goods the country exports compared with the value of the goods it imports.

High impact data today from the UK comes from the BOE with the release of both the Interest Rate Decision and the Asset Purchase Facility at 12pm. Both are likely to be priced into the market given that they are highly unlikely to be changed, but stranger things have happened...could the BOE throw a curve ball?

Germany pitted their wits against the UK yesterday, also releasing their Trade Balance data. The European powerhouse’s trade surplus shrank in February from the level of the previous month after exports fell amid an uncertain economic environment, but imports did continue to grow.

Europe's top economy posted a trade surplus of 15.7 billion euros in February ($21.6 billion), down nine percent from 17.3 billion in January, allowing for seasonal blips, official data showed. The dip was the result of slightly higher imports of 77.6 billion euros, against a 1.3-percent fall in exports to 93.3 billion euros. Germany has come under fire for its large trade surplus; with critics arguing that it’s economic might come at the expense of the Eurozone’s weaker members.

This didn’t stop the Euro once again holding onto its upward momentum against the USD, posting highs of 1.3828 during UK trading session. The only piece of data worth looking out for today comes by way of the ECB monthly report which contains the detailed analysis of the prevailing economic situation and the risks to price stability. We will be hoping this provides us with some clues on the much spoken about potential for QE for the Eurozone.

Unfortunately for the US, the USD found itself under the most pressure yesterday against its two biggest counterparts reaching its lowest level against Sterling for a month. The only major currency with tier one data out for the day came on the US trading session (19:00GMT) with the release of the FOMC minutes.

As traders looked for clues on their current Forward Guidance plan and stance on interest rates, the Dollar lost ground upon the discovery that the once bullish members of the FOMC were not at bullish as was expected. The Committee informed that forecasts overstated the rate rise pace, making no reference regarding the rate hike timing. Members also see consumer prices creeping back to the 2% Fed’s target. As a result, the ever resilient Euro maintained the momentum of this week, dragging the pair up to crucial level of 1.3857.

A look at today, we have medium impact Initial and Continuing Jobless Claims for release at 13:30GMT. With Non-Farm payrolls last week solid, even though slightly behind the figure achieved last month. The market will be watching closely to see just how well unemployment in the US is recovering. The Initial Jobless claims reading shows the measure of the number of people filing first time claims for State unemployment benefit, a lower reading will be seen as positive for the US.