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The BoE minutes of its October meeting (21) will shed more light on recent developments and the Bank’s future policy intentions. On Friday (23) we have the eagerly awaited Q3 GDP release; analysts expect it to show the UK economy grew by 0.3% q/q following five quarters of contraction. Retail sales (22) are likely to have risen in September on the back of warmer weather and signs of recovery in economic activity. In the euro area, the focus will be on Germany’s IFO business sentiment survey for October, which is expected to show further improvement in business expectations and sentiment. We also have Germany’s PMI manufacturing and services for October, which should show the manufacturing sector returning to growth and the outlook for the service sector improving further. For the euro area as a whole, PMI manufacturing and PMI services are expected to continue to rise, indicating further expansion.

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The Fed’s Beige Book (21) will likely report a strengthening and broadening recovery. However, the upswing is still patchy and the Fed is concerned that it is driven primarily by the inventory turnaround and fiscal stimulus, rather than by stronger final demand. Housing starts and permits (20) should grind higher. Upside surprises here would bode well for the strength of the recovery but market doubts that housing will play its usual leading role in the upswing, given the still-enormous inventory of unsold homes. We will hear from Fed Chairman Bernanke three times in the week, with his address on the economy (19) the most important. Several other FOMC members will be on the air too and markets will be alert to their thinking on the timing of tightening.