After several weeks on the sidelines, Sterling should be back on the mind of the market with two important announcements over the coming days.

The first is UK GDP which is expected to show the return of negative growth, with the consensus estimate of 0.1%. The second, which will be directly influenced by the first, is the most recent MPC minutes.

The market will be looking for any hint of further monetary easing over the next few months, the probability of which rises for every percentage point decline in the growth rate. It is looking likely that the UK will re-enter or may already be in a technical recession so further QE, which is Sterling negative, is highly likely at some point this year.

In early trading this morning we are relatively unchanged.

The US 4Q GDP adjustment is also due at the end of this week along with durable goods orders but the overall economic picture, at least at the moment seems much more rosy over in America (this trend will probably begin to decline again triggering QE3). This translates into Dollar strength at least over the coming month versus Sterling and the Euro, which have both staged minor recoveries over the last few days but look likely to come under pressure again if the US data is positive.

The one feature about the Greek saga that has been consistent throughout the last two years has been the painfully slow pace of action, both by the Greeks themselves and by politicians trying to agree exactly how to help them. The theme continues with the proposed bond swap which would see private holders of Greek debt take a 50% haircut on existing holdings and receive a note yielding around the 4% mark going forward. The debate now seems to revolve around whether the Greeks pay 3.5% or 4% on the newly issued note and is holding up a much needed resolution which needs to be agreed before March, when the Greeks effectively run out of Money.