Sterling had a buoyant day yesterday, making gains against 12 of its 16 most traded partners. This positivity started thanks to retail sales showing that the growth in this sector had increased in January, giving further encouraging evidence for the economic recovery. As a result, sterling reached its highest level in a week against the US dollar, and also appreciated versus the euro. The continuing positive data and improving economy has sparked some speculation that this will prompt an interest rate hike sooner than previously expected.
Today, however, is an important one for the UK currency, as the latest inflation report is due alongside the latest revision of Bank of England (BoE) Governor Mark Carney’s forward guidance. With the unemployment rate falling faster than expected to 7.1% – close to the Bank of England’s threshold of 7% – there has been some market chatter that the BoE could lower this threshold to buy themselves time from having to raise interest rates any time soon. As such, both of these will be closely watched by investors.
Wondering whether to buy or sell sterling now? Call your trader now for the latest rates, as we await the most influential release of the week.