A tough day for sterling saw it fall to the lowest level in two weeks against the euro as an agreement seems to have been reached on a third bailout for Greece from her creditors and with China catching the markets by surprise by devaluing its currency.
With a lack of fundamental data released on Tuesday, sterling found little support against a resurgent euro as the prospect of Greece leaving the Eurozone receded further still. Sterling fared slightly better versus the US dollar as the impact of China’s devaluation increased thoughts that a currency war may erupt as countries try to protect their exports, which could put paid to any increases in US and UK interest rates in the short term.
Today sees some focus return to the UK, with the release of the latest jobs report from the country. Although the unemployment rate will provide some interest, investors will be more eagerly awaiting the release of UK average earnings. There have been suggestions that there is little slack remaining in the UK economy, and if wage pressure continues to increase it will only strengthen the case for increased interest rates in the UK.