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 Hopes that a swift recovery fuelled by an ebullient services sector were knocked slightly yesterday with the publication of UK services data yesterday. While the PMI reading stayed above the all important 50 mark we did some degradation from previous strong readings as the impact of the VAT rise and the snowy Jan and Feb came to bear.

With this we can expect that the primary reading of Q1 GDP in the UK is likely to be weak before moving higher.

Sterling lost its grip on the 1.14 level against the euro briefly before bouncing back whereas the dollar continued to be bought as fears over the sovereign debt atmosphere in Mediterranean led to haven purchasing. The pound has since regained the 1.14 handle however and we look for a gradual increase towards the range highs (1.15-1540) before a move lower in the coming weeks.

The euro was not helped by a stagnant GDP reading typifying the problems found over the Channel.

The Times has today published the first opinion poll solely based on readings taken after Gordon Brown confirmed the election date for May 6th. The landscape has not changed dramatically with Cameron’s Conservatives maintaining a 7 point lead. We expect volatility in these figures in the coming days and weeks and especially after the upcoming American style debates.

What yesterday lacked in excitement we should surely make up for today with a slew of data. Although the central bank decisions from the UK and Europe will be foregone conclusions, we do expect movement throughout the post-match press conference from Trichet as he focuses on Greece above all others. We also have UK Industrial and Manufacturing production at 09.30, EU retail sales at 10.00 and German Industrial production at 11.00. 

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