After testing record lows beyond 0.82 against the Euro, the UK currency found some support on Monday, but was still generally on the defensive and it also failed to hold above 1.58 against the dollar with a slide to lows below 1.56. The latest BRC retail sales data was again weak with a 2.2% decline in like-for-like sales in the year to October which maintain fears over consumer spending levels. The Bank of England inflation report will, therefore, be watched closely on Wednesday for further details on the bank’s assessment of economic conditions and a very severe downgrading of prospects would continue to undermine the UK currency. Comments on fiscal policy will also remain under close scrutiny with Sterling marginally higher in early Europe on Tuesday. The visible trade deficit fell to GBP7.5bn for September from GBP8.0bn the previous month, but the impact will be limited as there were special factors supporting the account. | 
