A tough start to the year has seen sterling fall sharply across the board, and reach a five-year low against the US dollar. After starting the week strongly against the euro, sterling now finds itself at a three-month low against the single currency – and even fell to its lowest value against the US dollar since 2010.
Despite a Referendum on UK membership of the European Union (EU) potentially not taking place until the end of 2017, concern over the effect this could have on the UK’s economy has increased, especially as expectations are growing that the vote could take place in 2016. Alongside this, sterling has suffered from subdued purchasing mangers’ index (PMI) data from a number of industries this week. Both manufacturing and services industry growth data missed their expected levels and, combined with the UK’s Treasury chief voicing concern over the effect of global economic weakness on UK economic growth, this has seen sterling struggle significantly as the week wore on.
Today will see investor attention largely focused on the US where the release of the latest non-farm employment change figure could cause significant movement in the markets should it deviate far from the expected level.