ctivity in the UK appears to be faltering somewhat so far in 2017 as Britain approaches the beginning of formal exit talks with the European Union. A decline in the BRC’s measure of retail sales on Tuesday followed an underwhelming set of manufacturing and services data released last week.

On the Brexit front, Theresa May suffered her second defeat at the House of Lords as discussions over the government’s EU exit bill continue. The House of Lords voted overwhelmingly by 366 votes to 268 votes on a proposal that would see the Prime Minister needing to seek Parliamentary backing for any withdrawal deal agreed with the European Union.

However, Sterling was little moved this morning off the back of the news. We think investors are now resigned to the prospect of Article 50 being triggered this month and instead are awaiting news on how Brexit will affect the UK economy.

Private sector job creation data out of the US this afternoon will be the main economic data release today in an otherwise fairly quiet day of major announcements. Political news instead continues to be the main driving factor in the currency markets with the latest polls out of both France and the Netherlands likely to be in focus. UK Chancellor Philip Hammond will be announcing the latest budget in Parliament, although no big policy changes are expected.

Major currencies in detail

GBP

Sterling fell 0.2% against the Dollar after a weak set of consumer activity data added to last week’s poor PMI figures.

Consumer spending in the UK lost steam in February according to data released by the British Retail Consortium yesterday. In another sign that the Brexit uncertainty is beginning to filter its way through to domestic activity, sales decreased 0.4% last month, partly due to the first fall in non-food retail sales in six years. The main rationale for the slump is likely the sharp increase in consumer prices experienced since the Brexit vote. Inflation in the UK rose to a near three year high 1.8% in January.

With no economic data out of the UK whatsoever today the Pound will likely be driven by events elsewhere. The main test for Sterling this week will be Thursday’s ECB meeting and Friday’s US nonfarm payrolls.

EUR

The Euro was little changed on Tuesday amid a quiet economic calendar. The single currency ended London trading 0.3% lower versus the Dollar.

Fourth quarter GDP growth in the Eurozone remained unrevised at 0.4% quarter-on-quarter yesterday, as expected. Given the indicators lag, investors are paying far more attention to the recent PMI’s which soared to multi-year highs last month. It remains to be seen whether ECB President Mario Draghi will acknowledge the recent uptick in activity during the central bank’s press conference tomorrow afternoon.

Activity today is likely to remain fairly quiet with investors instead awaiting tomorrow’s European Central Bank meeting. Industrial production data out of Germany and French trade figures are unlikely shift the Euro.

USD

The Dollar rose 0.25% against its major peers yesterday, although was fairly range bound as investors await this Friday’s nonfarm payrolls number.

The Dollar was unfazed by a deterioration in the US trade balance yesterday. The country’s trade deficit grew to $48.5 billion from $44.3 billion, right in line with economists’ expectations.

A rise in 10 year government bond yields above the key 2.5% level provided a slight boost to the greenback. Both the bond and currency markets continue to react to the growing chances of multiple interest rate hikes in the US this year.

This afternoon’s private sector employment data from ADP is generally seen as a decent gauge for Friday’s more important nonfarm payrolls number. The private sector is expected to have added a fairly healthy 190,000 jobs in February which would bode well for a similarly strong number on Friday.