The pound continued to dribble lower yesterday as the market continued to digest the Bank of England’s November Minutes. The news that the BOE is continuing to place weight behind a plan to cut the interest rate that commercial banks receive on deposits was the major unexpected sentence in the minutes and has hurt sterling accordingly.

The pound was buoyed however by retail sales for October that rose at the fastest rate since the beginning of the downturn. The combination of rubbish bought for the second largest commercial fraud after Valentine’s; Halloween, and half term for schools saw sales rise 0.4%. Shops will be hoping to carry this through to Xmas. I was on Oxford St (even Chief Economists get some free time) yesterday and while it was pretty packed with people not many were carrying bags. Maybe it’s too early?

In US news the index of economic leading indicators continued to rise. This is the seventh month in a row which has seen the index showing better prospects for the near term future in the US although the prospects of a swift, v-shaped recovery are looking less and less likely.

Newsflow is fairly quiet today and we believe GBP will continue to weaken over the course of the day.

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