Sterling held up fairly well in initial morning trade despite a weak assessment of economic conditions by Prime Minister Gordon Brown. UK Industrial Production data m/m came out at -0.4% in January much weaker than the 0.3% expected and the previous 0.5% figure. As sentiment towards the pound was already slightly negative the data dragged sterling to an 11 month low versus the dollar and a 3 month low against the Euro.A lack of economic data for the remainder of the day  saw technical trade, equity markets and commodities take charge. Oil price fluctuations created volatility in cable as the rise and fall of prices impacted the dollar. The movements were fuelled by BP’s confirmation that it would be purchasing $7bln in assets from Devon Energy. Further pressure on the pound came from the M&A impact of the BP announcement. Gold prices took charge of late afternoon trade as the commodity price fell over $20 per ounce sparking a profit sell off in dollars.

Trichet’s speech overnight allowed the euro to hold onto to its gains as the ECB President said the central bank was open to the creation of a European monetary fund to support member countries.

There is no local data scheduled for release today so sterling will take its cues from the wider market. The ECB releases its monthly report providing growth and inflation expectations while in the US only Trade balance figures are expected.