Bank of England Rate Decision (12:00 GMT; 07:00 EST)
Consensus:         5.00%
Previous:              5.00%

Outlook:  The Monetary Policy Committee is expected to cap the number of rate hikes for the year at two.  After lifting the nationâ�,��"�s overnight lending rate twice by 25 basis points in the past four months, the Bank of England group is expected to shift to a wait-and-see stance to monitor the development of recent data.  Much of the caution comes on the part of soft employment, manufacturing and consumer confidence trends. Only months ago, the domestic factory base was showing signs of a substantial rebound, but a large 0.8 percent drop in industrial production and a surprise slip in the manufacturing survey look to curb the strength.  However, it is the consumer that holds the reins to the evolution of growth and inflation.  Both the Nationwide and GfK consumer confidence surveys for November reported much lower than expected reads.  The sharp drop in sentiment was a volatile mix of Novemberâ�,��"�s rate hike and the full stall in the employment market.  In the most recent reports, the ILO jobless rate unexpectedly grew to 5.6 percent over the month of September, the highest in five years.  Whatâ�,��"�s more, closely watched wage growth has started to falter in sync.  Average earnings growth slowed to 3.9 percent through the same month, the lowest since January; while the exclusion of bonuses pulled the gauge all the way to a three year low.  While all of aforementioned indicators will force the central bank to tread lightly, a cut does not seem to be on the horizon yet.  Despite the trepidation in consumer sentiment, retail sales jumped 0.9 percent for the biggest one month increase since June of 2005.  Whatâ�,��"�s more, GDP through the third quarter was still running hot at a two year high 2.8 percent. Finally, inflation holds persistently above the BoEâ�,��"�s target rate.  The annual measurement of CPI printed 2.4 percent growth in October while the RPI for the same period accelerated to a near eight year high 3.7 percent.  The latter will be particularly important in the opening months of 2007 as labor unions negotiate wages for the new year.

European Central Bank Rate Decision (12:45 GMT; 07:45 EST)
Consensus:         3.25%
Previous:              3.25%

Outlook:  Ever since the European Central Bank decided to hike rates 25 basis points to 3.25 percent back in October, President Jean-Claude Trichet and his colleagues have maintained an extremely hawkish stance in preparing the markets for a December tightening of monetary policy. The key phrase, â�,��"strong vigilance,â�,� has been used frequently in regards to the action needed to contain inflation since the ECB held rates steady in November, which has essentially been the central banker code word to signal an upcoming increase in rates. However, economic data has been mixed over the past month, as third quarter GDP for the Euro-zone slowed to 0.5 percent from 1.0 percent in the second quarter. On the flip side, CPI for November accelerated to an annual rate of 1.8 percent from 1.6 percent, despite weaker energy costs and underpinning the ECBâ�,��"�s concerns that second round effects would eventually seep into consumer prices. As a result, an increase in rates should come as no surprise to traders. What may send a jolt through the markets, however, are Mr. Trichetâ�,��"�s commentary and the ECBâ�,��"�s outlook for growth and inflation. Should projections call for strong expansion and prices in 2007, or if ECB policy makers continue with rhetoric noting accommodative rates, the euro will likely remain bid. However, if the markets perceive a substantial pause for ECB rates in 2007, the recent ascension of EUR/USD to record highs could send the pair plummeting.

UK Leading Indicator Index (MoM) (OCT) (15:30 GMT; 10:30 EST)
Consensus:         n/a
Previous:              0.2%

Outlook:  The United Kingdomâ�,��"�s leading indicator composite, used to forecast growth for the coming six to nine months, may run could keep up its modest pace of growth through October.   Many of the components that go into calculating the index have received a convincing boost.  From the breakdown, consumer confidence will act as one of the most convincing indicators for a pick up in the leading report.  The nationwide consumer confidence indicator grew for the third month in October to a nine-month high as Brits responded to strong GDP numbers and promising wage growth expectations.  Another strong addition to the composite could be made by stock market performance as the FTSE 100 surged to recent highs through the month.  On the other hand, questionable activity from the business side of the economy could act as the anchor for a strong rise in the index.  Though retail sales in October jumped 0.9 percent for the period, orders strength is still questionable as export demand is tempered by a quickly rising pound and local bookings are choked by rate hikes and a souring employment outlook.  Furthermore, the expected output is in question after the monthly industrial production gauge reported a sizable 0.8 percent drop on the month.  However the gauge prints, it will be analyzed against the third quarter GDP release, which still holds at a three year high.

Previous:  Forecasts for growth in the coming quarters continue to project a robust pace for Europeâ�,��"�s second largest economy, at least according to Septemberâ�,��"�s leading indicator index.  The monthly composite grew 0.2 percent following an upwardly revised 0.3 percent the month before.  When the headline report was broken into its components, it was obvious that there were few draws on the overall read.  The only declines came on the part of the steady waning of consumer confidence and a modest contraction in new orders.  From the positive column, order book volume, fixed interest rates and productivity were all feeding into a positive print.  Also joining the leading indicator in a 0.2 percent advance through September was the coincidence index which measures current economic strength.  Form this group, industrial production, employment and household income were all firmly backing economic growth through the last month of the quarter.  The report proved its worth when the governmentâ�,��"�s third quarter GDP report revealed growth that hit multi-year highs.

Richard Lee is a Currency Strategist at FXCM.