Sterling struggled yesterday morning as continued fallout from the dovish Bank of England minutes and the initially weaker than expected UK retail sales figures weighed on the pound. Losses were short-lived though as retail sales figures were revised to show a pickup in sales. June sales rose to 1.0% from the previous 0.7% due in part to the impact of the World Cup. The pound recovered losses against the euro while extending gains versus the dollar.

The Euro received a boost across the board as better than expected German services and manufacturing numbers eased concerns over continued economic recovery in Europe. Mixed U.S. data releases kept the dollar range bound as Fed Chairman Ben Bernanke continued his testimony before congress. Weekly jobless claims increased slightly and linked in with Bernanke states that the Fed would try to push borrowing costs even lower if the jobs market continues to languish. The dovish statements are keeping traders cautious and with confidence regarding the stress tests still high the single currency was pushed higher.

German business expectations figures are scheduled for release today. The main market events will be the release of preliminary Q2 UK GDP figures and the much debated European stress tests this evening.