What appeared to be a poor day for sterling was turned on its head following the US Federal Reserve meeting announcement early evening our time which saw sterling gaining two cents in a very short period of time.
In the first part of the day sterling set fresh multi-year lows against the US dollar and continue its fall versus the euro as labour data from the UK came in below forecast levels. Wage growth was below expectations and unemployment had also failed to move below 5.7%. The negative effect of this was compounded by the minutes from the Bank of England’s (BoE) latest policy meeting which highlighted a strong sterling could depress interest rates. Sterling was able to recover somewhat throughout the afternoon as the markets reacted positively to news from the Chancellor’s Budget that the Office of Budget Responsibility (OBR) is raising its economic growth forecasts for 2015.
A quiet day lies ahead for UK economic releases so attention will be focused on both the Eurozone as the European Central Bank releases the value of their latest long term bank loans and on the US as markets ponder the outcomes from the latest Federal Reserve meeting.