Daily Forex Fundamentals | Written by DailyFX | Feb 18 09 06:30 GMT |

British Pound In Focus Ahead Of Bank Of England Minutes The British Pound may see selling pressure in European hours if minutes from the last meeting of the Bank of England hint at a dovish bias for the March interest announcement. Overnight trading saw Australian retail sales improve in the fourth quarter, bolstered by monetary and fiscal stimulus, though Westpac's leading index continued to point to recession in 2009. Key Overnight Developments Australian Retail Sales Improve But Leading Index Points to Recession Euro Falls Most in 5 Weeks Against US Dollar as Traders Dump Risky Assets Critical Levels The Euro consolidated losses near the 1.26 mark in overnight trading having sold off to test as low as 1.2561 in New York hours. The single currency lost -1.7% to the greenback, the largest intraday drop in 5 weeks, as stock markets compounded losses and sent traders scrambling to the safe haven of the Dollar. The British Pound was little changed, oscillating around the 1.4230 level. Technical positioning favors continued EURUSD and GBPUSD downside going forward. Asia Session Highlights Australia's Westpac Leading Index fell -0.4% in December, the second consecutive month in negative territory. The index is comprised of eight separate gauges of performance that look to gauge the economy's trajectory over the coming three to nine months. The measure's annualized growth rate slipped to -1.2% suggesting the antipodean nation is on pace to see its first recession since 1991. Retail Sales added 0.8% in the fourth quarter, the most in a year, as a series of aggressive interest rate cuts (totaling 4% since September), a fiscal stimulus package worth nearly A$88 billion, and a sharp drop in oil prices (down close to 70% since peaking in July) all helped support spending amid the global slowdown. Spending is likely to falter through 2009 however as consumer confidence fell to the lowest level in 4 months while the unemployment rate rose to 4.8% in January to issue the largest monthly gain since February 2001. The markets continue to expect the Reserve Bank of Australia to deliver at least a 0.50% interest rate cut in March and 75-100 basis points in total easing over the next 12 months. Euro Session: What to Expect Minutes from the last policy meeting of the Bank of England top the economic calendar in European hours. Bank Governor Mervyn King recently noted that further rate cuts 'may well be required' as the economy slogs in a 'deep recession' and CPI falls below the central bank's target of 2% by the end of May. Still, overnight index swaps show the markets are pricing in no change in borrowing costs in March. A particularly dovish tone to today's release may well upset these expectations, weighing on the Pound as markets re-price the yield outlook. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.