After all the positive data coming out of the US we now see a little upset with the economy apparently growing a little  less than anticipated as tax increases result in less consumer spending. Household expenditure, which accounts for 70% of the economy fell from a rate of 3.4% to 2.6% as higher payroll taxes caused a drop in discretionary spending.

Also we see sales on the UK high street were flat in June according to the CBI Distributive Trades survey. The number of retailers reporting an increase in sales was +1%, an improvement on May but nothing exceptional. On a more positive note, consensus is pointing to a pick up sales volumes in July.

The UK Chancellor George Osborne came out with little of interest as usual. He unveiled a new round of spending cuts yesterday and at the same time promised to pump money back into the economy which made little sense to anyone. To stem the mounting criticism that continued austerity is hampering economic growth, Osborne promised £300bn of capital spending between now and the end of the decade, although it was pointed out in the house that he probably would not be in office at the end of the decade.

Osborne’s speech saw Sterling under pressure with GBP/USD down a cent or more at 1.5280.  EUR/USD came down to 1.3025 after comments from President Draghi of the ECB and we now see GBP/EUR trading around 1.1730 level.