Tuesday was a largely positive day for sterling, pushing back towards recent highs against the euro but trading largely sideways against the strong US dollar.
When little major economic data is released from around the globe, investors tend to be particularly sensitive to indicators from central banks – and this certainly proved to be the case on yesterday, when the European Central Bank (ECB) confirmed that inflation was not growing at the expected level, and they would be willing to act to stimulate growth throughout the Eurozone. Sterling was able to capitalise on this and strengthen for a third straight day against the single currency ahead of today’s UK labour data. In contrast, sterling struggled to make headway against the strong US dollar, and failed to extend gains seen on Monday, although first thing this morning we have seen a slight upswing for sterling.
Today sees the release of UK labour data from the previous month – with average earnings over the previous quarter expected to show a slight increase, whilst a modest pick-up in unemployment claims is also forecast. Should we see any significant deviation from the forecast levels in these figures, we could see further sterling movement.