A difficult week for sterling which saw rapid movements, initially weakening, then strengthening against the euro and the US dollar, as contrasting economic data flows took effect. Over the week, so far, sterling has strengthened against both.
Inflation data from the UK on Tuesday saw sterling suffer against its major trading partners as inflation slipped into negative territory for the second time in six months. Sterling lost over a cent against both the US dollar and the euro, falling to an eight-month low versus the latter. Wednesday’s unemployment data gave sterling a boost, with unemployment falling to 5.4%. Although average earnings did not rise as far as expected, 3% growth provided support to the belief that the job market is performing strongly.
Thursday saw sterling further unwind recent losses suffered against the euro, while pushing to a fresh three-month high against the US dollar as inflation in the States slipped to -0.2%.
Another quiet day for sterling sees no significant data released today. Focus will again be trained on the US, with an early indicator of consumer sentiment released in the afternoon.