Expanding Service Sector May Be Enough To Keep BoE on Hold

Fundamental Headlines

• Greece Unveils Plan to Save $6.53 Billion – Wall Street Journal
• Borrowers Miss Out on Billions in Savings– Wall Street Journal
• Traders optimistic Greek crisis can be contained - Financial Times
• Fed's Fisher Calls for Accord to Break Up `Too Big to Fail' Finance Firms – Bloomberg
• Hedge Funds Said to Get U.S. Demand to Retain Records of Bets Against Euro- Bloomberg

EUR/USD – Euro-zone retail sales declined 0.3% in January as expected as consumers continue to curb spending as they face continued job losses and rising energy costs. Sales of non-food items fell 1.5% on the month as Europeans continue to restrict their spending to non-discretionary items. Meanwhile, the EZ PMI composite final reading was unchanged at 53.7, despite a revision in the service sector reading to 51.8 from 52.0. The manufacturing and service sector expanded for a seventh straight month as strong demand from abroad continues to be a source of growth. To discuss this and other topics, please visit the EUR/USD forum.

GBP/USD – The U.K. PMI service reading improved to a three year high of 58.4, surpassing estimates of 55.0. The sector expanded for a tenth straight month as Britons have begun to re-established consumption habits as the recession comes to an end. The U.K. economy grew by 0.3% in the fourth quarter, but the central bank is still concerned that tight credit markets will ultimately weigh on consumer and business spending and threaten the recovery. Therefore, at tomorrow’s policy makers will decide to add to their quantitative easing efforts or continue to remain on hold as they better assess the impact of past actions. To discuss this and other topics, please visit the GBP/USD forum.