Sterling surrendered many of its recent gains against the euro while recovering some ground lost against the US dollar during a week with little significant UK data of note. Monday saw sterling make its most significant gain of the week, pushing higher against the US dollar as expectations for a September rate hike by the US Federal Reserve suffered a blow. However, sterling strength wavered on Tuesday as an agreement between Greece and its creditors over a third bailout program for the country spurred a resurgence in the euro.
With the Chinese central bank taking action to devalue their currency, fresh global deflation fears allowed sterling to gain further ground on the US dollar throughout the middle of the week. Wednesday’s job data reported a weaker-than-expected rise in average earnings of 2.4%. Despite still showing strong growth, this figure prompted sterling to fall to a one-month low against the euro. A relatively quiet Thursday saw sterling remain flat against both the euro and US dollar, as retail sales data from the states was as expected.
Friday brings the release of preliminary economic growth figures from France, Germany and Italy. With signs of growth emerging across Europe, these figures will be eagerly awaited. Later in the afternoon, inflation data and consumer sentiment figures from the US will also provide interest.