A mixed start to the week saw sterling push to a fresh three-and-a-half month high against the euro on Monday, whilst also slipping to a second straight day of losses against the US dollar. With little economic data released on Monday, in the main driver of sterling’s strength came as markets reacted to events in Paris on Friday.
Markets did settle as the day wore on. Comments from the European Central Bank (ECB) confirming that interest rates will have to remain low for an extended period in order to bring inflation in line with their objective saw sterling hold onto the gains it had made against the euro at the start of the day.
Today sees the release of UK inflation data from the previous month. With inflation slipping into negative territory for the second time in 6 months in throughout September, any further contraction in prices could see sterling suffer.