On the whole another steady day for sterling as it ended the day very close to where it had started against the US dollar and the euro.
More members of the European Union spoke out over the Greek debt crisis but the early positive movement against the euro was soon reversed, as news emerged that the latest UK productivity had shown a sharp decline, casting doubts over the long-term growth prospects of the UK. In contrast to this, sterling advanced on the US dollar throughout the afternoon after a member of the US Federal Reserve bank spoke about the need to take a novel approach to raising interest rates in the US. With investors always keen to avoid any uncertainty, this news allowed sterling to regain ground against the US dollar.
This morning sees the release of minutes from the latest meeting of the Bank of England’s monetary policy committee. Although we are highly unlikely to see a change in any voting patterns, any variation on member’s stances on interest rates could induce volatility in the markets. There are worries that further reductions in interest rates could be contemplated to counter low inflation which should weaken sterling.