Sterling is higher overnight as 3 chunky pieces of data went in its favour whilst news flow has backed it up as well.

GDP in the UK was revised upwards for last quarter although the measure still remains in negative territory (-0.6%). We did not see an immediate jump however as the level for Q1 was revised downwards from -2.4% to -2.5%. The upward revision is due to improving conditions in the construction sector.

CBI distributive trades, essentially a survey of retail activity, rose to its highest level in 5 months with 3% more of those surveyed reporting increases in sales as opposed to declines. GFK consumer confidence was also nicely higher overnight, giving credence to that CBI figure. Consumer morale actually enjoyed its biggest monthly boost in more than 14 years in September as people grew more optimistic about the economic outlook than at any time in the past decade.

Sterling has also been boosted by a report in the Telegraph newspaper which rules out the possibility of the Bank of England cutting the rate of interest on bank’s deposits. Charlie Bean, Deputy Governor and Spencer Dale, Chief Economist, in a rare briefing to the press described it as a ’second order item’ and something ‘not for immediate consumption’. They haven’t closed the door on it yet but the histrionics behind it may now calm down and through that sterling may too as well.

It is budget day in France today with Sarkozy’s spending apparently riding towards the €150bn mark, 8% of GDP. Other data includes German unemployment, ‘flash’ CPI from the Eurozone and ADP employment from the US.

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