Euroland GDP data today

- France and Germany exceed expectations
- Contraction of -0.2% forecast for euro area

Every four years the Olympic razzmatazz inspires consumers with the ancient ideals of "Maior, Clarior, Tenuior", or "larger, brighter, flatter". Everyone wants a new telly. Many go out and buy one. A shoplifter in Oslo had a better idea. She went into a shop, stuck a 42-inch TV between her legs and walked out with it clasped between her thighs. The woman might have escaped with her loot but her thievery coincided with Mo Farah winning the 10,000 metres and the cheering gave her away.

There was little chance of any cheering on Monday, other than of the muted kind for the return of Angela Merkel from her hiking holiday in the Alps. With the chancellor back in the saddle, investors regained some of their optimism that the European Central Bank's strategy to save the euro might, in the end, bear fruit.

But investors had very little else to go on yesterday. There was a weird relief rally for the euro when Greece revealed that its economy had shrunk by only -1.6% (-6.2% annualised) in the second quarter of the year. The figure was better than the annualised contractions of -7.5% and -6.5% in the previous two quarters and not as bad as analysts had feared, so what else could investors do but buy the euro?

Sterling came in for a bit of stick following the Bank of England governor's cautious article in the Mail on Sunday, even though nothing he wrote was new or surprising. With nowhere else to hunt, investors thought they might as well try to make something of his comments. The RICS house price balance, announced overnight, was another negative for sterling at -24%. It was the 25th consecutive month in which estate agents reported a net decline in prices.

The pound could face more downward pressure this morning if UK consumer price index inflation falls from 2.4% to 2.3%, as analysts predict. Such a number would be comfortably within the Monetary Policy Committee's 1%-3% target range. In the opinion of some, it would encourage the MPC to indulge in more asset purchases, colloquially known as "printing money".

Today's other big story is eurozone Q2 gross domestic product. So far this morning, France has reported a second quarter of 0% growth and Germany's economy expanded by 0.3%. Both numbers were higher than forecast. At ten o'clock the figure for Euroland as a whole comes out. Analysts are looking for -0.2% but the better-than-expected data from France and Germany will presumably swerve that expectation upwards.

At the same time the GDP figures come out, ZEW reports on German and euro area investor sentiment. The August readings are expected to be slightly softer than the previous month. After lunch come US producer (factory gate) prices and retail sales. Tonight Australia announces the latest consumer confidence figure.

A low print for UK inflation and a Euroland Q2 GDP figure above -0.2% are probably the worst case for sterling. But bear in mind that the FX market is seasonally very thin in August; a one-cent move is much more cheaply achieved than it would be with liquidity at normal levels, for example in spring and autumn.