The rate setting MPC would have seen the flash estimate for April's rate of inflation during their deliberations and the fact that they opted for no change will back this up. Many economists think BOE governor Mervyn King will have to write a second letter to the Chancellor explaining why inflation has risen by more than a percentage point above the government's 2% target. Meanwhile the relentless rise in manufactures input prices in the wake of rising energy and commodity costs is expected to be illustrated further in today’s official UK producers prices data. Sterling eased against a number of majors after the rate announcement on Thursday on signs that the faltering economy would prompt the Bank of England to resume it easing cycle.

In Europe this week many countries' 1st quarter GDP growth figures will be released, while the flash estimate for the euro zone region is due on Thursday. The April figures for inflation are also published this week. In the U.S.A the markets will focus on two speeches by Federal Reserve Chairman Ben Bernanke.

US dollar trading was mixed against a number of majors on Friday as the trade deficit narrowed sharply for the month of March, with imports falling 2.9% the most since the last recession ended. Crude oil traded at a record high once again touching US$126.25 in after hours trading. Crude closed the session up by US$2.56 a barrel to US$125.40.

The Australian dollar was range bound and held firm on sturdy commodities, despite falling equities. The Japanese Yen continued its rally as equity market fell on the back of AIG profit earnings.

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