The Beige book – a round up of anecdotal evidence from the bank’s regions suggested the economy had expanded at a “moderate or steady” pace in January and February with little sign that wages were creating inflationary pressure.

Moreover, the release of cross-border portfolio flows data which showed net inflows into the US reached just $66bln in January. This is the second straight month that purchases of US assets have been insufficient to cover the US trade deficit.

Worth noting that there may be warning signs here that the markets might be turning away from the dollar positive interest rate story to the dollar negative current account and trade deficit story – again…

A dip in oil prices also helped the stock markets.

The dollar slipped to its lowest level in a week against the euro and the softer sentiment on the greenback enabled sterling to consolidate above 1.7420.

However, Sterling is by no means looking suddenly healthier. The pound met with some renewed selling pressure on news yesterday that the UK’s jobless tally rose at its fastest pace for 13 years in February and revived more talk of a possible interest rate cut.

The unemployment number rose by 14,600 in February well above the expected 3,000 rise and the sharpest increase since 1992. Average earnings growth remained at only 3.5% in the year to January well below the 4.5% rate the BOE has said is compatible with its inflation target.

Keep your eye on the release at 9.30am of the Retail Sales figures for February. These fell sharply in January (down 1.3%) unwinding the strength seen at the end of last year. A modest rise of 0.4% is expected but needless to say anything lower will reinforce the bearish view on interest rates and the pound. EUR/GBP looks poised again to test the key resistance area of 0.6930 (1.4430).