020 7898 0500Sterling fell against the US dollar late yesterday as the belief grows that the US Federal Reserve will increase US interest rates today, the first hike since 2006.
A quiet start to the day saw little movement across the board, with markets awaiting the release of inflation data from the UK and US. UK consumer inflation showed positive growth for the first time in four months, growing by 0.1% throughout November. Conversely, manufacturing inflation fell by 1.6% last month, tempering optimism in the UK economic outlook. Sterling gained some ground against the euro following the release of this data, pushing back from recent one-and-a-half month lows.
Late afternoon, the UK currency struggled against the US dollar following the announcement of US inflation data at the higher end of expectations. It will be a very major surprise if US interest rates are not raised today.
Today sees the release of employment data from the UK, with average earnings over the previous quarter providing the main point of interest from the UK. However, investors will largely be awaiting the Federal Reserve’s interest rate decision, to be unveiled this evening.
