020 7898 0500Sterling above the €1.40/£1 level and being close to U$1.60/£1 seems a distant summer memory as it struggled to make ground against both the euro and US dollar this week. Disappointing economic data offset thanks to the (more positive) rumblings of a potential multi-million pound merger between two drinks giants.
The Services purchasing managers’ index (PMI) released on Monday revealed the slowest rate of growth for this sector in two-and-a-half years and saw sterling fall sharply across the board. Sterling was able to recover from this as news of a potential takeover of SABMiller by AB Inbev saw investors support sterling in advance of a potential very large sterling purchase by the Belgian giant. Manufacturing production figures on Wednesday provided some optimism, with growth of 0.5% in September outstripping the 0.4% forecast by economists. Yesterday saw the release of minutes from the Bank of England’s (BoE) latest meeting. As expected, these showed an 8-1 split in favour of keeping rates on hold, and a belief that inflation could remain below 1% well into 2016. With this news seemingly delaying an interest rate rise for the foreseeable future, sterling lost some of the ground gained earlier in the week.
Today is expected to be a relatively quiet day across the board, with trade balance data released this morning likely to be the only significant release from the UK. With a surprisingly large deficit seen in last month’s figure, sterling investors will be hoping for an increase in the number of exports throughout September.
