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The Forex market got off to a slow start this week, with both the US and Canadian markets closed due to public holidays.

None the less, one minute after midnight yesterday, the UK released its monthly Rightmove HPI – showing that the asking prices for houses rose 3.2%, the sharpest increase since April 2007.The 3.2% monthly rise followed a 0.4% rise in January, leaving housing prices in the UK up 6.1% on the year – however, the report went on to mentioned that the rate of increase in housing asking price was not substantial as it merely reflected a scarcity of supply.

Last week the Pound managed to regain some of its prior week losses, up 0.66% against the USD – the pair closed on Friday at 1.56997. For the majority of the past week, the GBP/USD moved sideways, fluctuating between 1.55604 and 1.57633.

Yesterday morning’s early HPI index pushed the pound to high of 1.57188 – however the pair eased back to the 1.5650 area during the US session. This morning, the Pound re-attempted its bullish movement against the dollar, appreciating as far as 1.57217 (up 0.36% from yesterday’s close).

Early this morning (0930GMT), the UK will publish its yearly CPI, considered the most important indicator of inflation. Last week Mervyn King’s speech acknowledged that inflation was likely to have risen 3% in January.

The last CPI report showed a rise of 2.9%; however, this morning’s report is predicting a drastic rise of 3.6% in inflation.

Simultaneously, the BoE is scheduled to release the Core CPI y/y, also expecting an increase of 3.2% versus last month’s rise of 2.8%. Higher or lower than expected percentage increase in the CPI, will most definitely produce volatile waves of movement for the Pound.

The Euro slightly appreciated against the US Dollar, in the early Asian session, as the outcome of a meeting of euro zone finance ministers failed to instill confidence that Greece’s debt problems will be resolved quickly.

Moderate gains in higher-yielding currencies such as the Australian and New Zealand dollars helped to lift the single European currency slightly; however, the euro still remained close to its eight month low against the USD. The EUR/USD increased 0.477%, as the Euro managed to rebound from yesterday’s close of 1.35976 to a high of 1.36624 this morning.

Later this morning at 10:00 (GMT), Germany will release its ZEW Economic Sentiment – an important gauge of economic activity. In the past months, as a reflection of the Euro zone’s troubles as well as Germany’s stagnant economy, the indicator has been quickly deteriorating. For the sixth time in a row, this all important German indicator is expected to take a dive again – analysts are expecting a drop from the previous level of 47.2 to 42.5.