The vast number of UK survey’s released yesterday provided an overall picture of an economy that is probably stabilising but is struggling to achieve any meaningful growth. This outlook was confirmed by the most pessimistic of the surveys released yesterday from the Centre for Economics and Business Research (CEBR). The report forecasts that interest rates in the UK will stay at their current record low level until at least 2011 and that the BOE will keep rates below 2% until 2014. The CEBR also encouraged a further £75bn rise in quantitative easing. The less than inspiring reports dented the sentiment of sterling even if the UK stock market managed to turn a blind eye and continue to rally.

Yesterday the pound fell to its lowest level in more than six months against the euro, increasing its depreciation against the euro to over 9% since July. Meanwhile, in another sign of the overall weakness in the UK economy relative to its peer’s, sterling is the only major currency to lose ground against the falling US dollar in the past month. Regardless of what the UK stock market is saying currency investors are signalling that they believe the UK economy is one of the weakest out of the G7; speculators have taken new shorts of sterling to over 62,000 at the beginning of October, the highest level of net shorts seen since 1992. This week in the UK, we have key September inflation figures due out today and on Wednesday labour reports; the latter of which could further dent sentiment towards sterling.

In Europe, we are due the German and Euro area ZEW survey reports today but there are still no key economic reports due from the US until Wednesday. As such, attention today will turn to the third quarter earning reports from Intel and Johnson & Johnson. Indeed, it will be difficult for economic reports in the US to get much attention during the course of the week given the key earnings reports due out. On Thursday the next key technology company Google is due to report. Whilst on the financial side, JP Morgan, Citigroup, Goldman Sachs, Bank of America are all due to report during the course of the week.

Sources: Reuters: BBC: Bloomberg: Lawshare: Deutsche Bank (db): Proquote: Financial Times: Wall Street Journal: CLSA: Sharescope: Market News. Capital Economics: CNBC: Wikipedia:

Please note this report provides a guide to some of the relevant areas that individual investors should consider discussing with an authorised adviser in relation to their specific circumstances, it does not constitute individual advice. As a result no action should be taken or refrained from being taken as a result of its content.