A mixed day for sterling saw it steady against most currencies including the euro, but strengthen significantly versus the US dollar as US retails sales came in under expectation increasing the belief that US interest rates will not be increased in June.
UK inflation remained at zero throughout March. With news emerging on Monday night that the Greek government may be preparing to default on their debts, sterling had moved higher against the euro throughout Monday evening. However, with inflation remaining at a record-low 0% for a second straight month, and core inflation falling by 0.2%, sterling immediately fell across the board over fears that a prolonged period of low inflation would see the Bank of England push back their decision to raise interest rates. However, sterling soon found reprieve against the US dollar, with disappointing US retail sales for the month of March allowing sterling to push to the highest levels in almost a week against the US dollar.
A relatively quiet day looks set to unfold for sterling, with no economic releases of note coming up. Instead, attention will be turned to the Eurozone, where the announcement of the latest interest rate decision from the European Central Bank – along with the accompanying press conference – will be keenly awaited.