020 7898 0500A tough start to the week saw sterling struggle across the board as markets reacted to a mixture of poor economic data from the UK, and fears that the Bank of England (BoE) may comment further on increased inflation risks.
A relatively quiet day across the markets on Monday saw sterling trend lower following a succession of negative economic data releases from the UK last week. The release of disappointing housing inflation data and manufacturing production for November saw sterling fall to a one-month low against the euro, while coming close to the lowest level in eight months versus the US dollar. Sterling staged a recovery throughout the latter stages of the week, with concerns over global energy prices allowing sterling to push higher against the US dollar while remaining relatively flat against the single currency.
Thursday saw the release of the UK interest rate decision, and minutes from the latest meeting of the BoE’s monetary policy committee. As expected, this showed an 8-1 split in favour of keeping rates on hold, while the decline in global oil prices was highlighted as a factor which could see inflation remain low. Despite losing ground in the wake of this announcement, sterling recovered well throughout the day to find itself close to where we started the week as we head into Friday.
Attention will turn to the US today, where retail sales and unemployment data are bound to carry significant weight throughout trading today. These could affect dollar markets, impacting sterling in turn.
