By Nigel Hodges, of Currency Solutions

A barrage of statistics released this week have been jostling for space in the media like crowded real estate signs outside an unsold home.

Housing industry statistics, Monetary Policy Committee minutes, ONS retail figures and Home Office Labour data have all painted a picture of the economy this week in bleak and brooding colours.

House prices are down, labour recruitment is down, the value of the pound is down, and yet despite all this doom and gloom, it seems we have all been treating ourselves to a little retail therapy.

News today that retail spending is up, 0.8% for July, has surprised retailers and economists and could provide the clue to avoiding a full blown recession here in the UK.

Major news this week from the Bank of England's Monetary Policy Committee came in the form of their decision to leave interest rates unchanged.

This dovish stance, adopted by seven of the nine committee members, has been likened to choosing the lesser of two evils by some commentators.

While it leaves inflation hurtling towards 5%, the dilemma of the MPC was not to appear soft on inflation but also not to trigger it further by cutting interest rates too quickly.

By opting to leave rates unchanged at present, the MPC still have cuts up their sleeve for the future, while hoping that slow growth will return some kind of equilibrium to the economy in the interim.

Housing industry data has also been dismal this week, reinforcing the notion that the economy is in a state of 'stagflation'. Average house prices are down, by 5.3% in London for August, as the market is flooded with unsold homes.

Stricter lending criteria enforced by banks and the decline of new mortgage approvals, has led to predictions housing transactions could fall 60% below the worst levels seen in the 1990's.

The consequences of a contraction in the industry are potentially huge as the housing market supplies 9% of the UK GDP.

The effects of this negative press were felt in the currency markets this week and the pound has been like the butt of a bad joke.

All the major currencies have gained at our expense. Just this morning the pound-euro conversion rate struck an 8 day low and it remains vulnerable over the coming days.

The US dollar has remained strong this week as it continues its trend towards stabilisation and tentative growth. The Canadian dollar has also performed well, benefiting from strong commodity prices, as has the NZD, AUD and the NOK (Norwegian Krone). The value of the Yen is holding and the currency is worth retaining at present.

Enjoy the long weekend and perhaps do your bit for the British economy and engage in a little retail escapism!