A positive start to the week for sterling has seen it move higher across the board, pushing to the highest levels of 2015 against the US dollar as investors continue to react positively to the conclusive victory for the Conservative party in last week’s UK parliamentary election. With little fundamental economic data released on Monday, and the Bank of England (BoE) keeping UK interest rates on hold at 0.5%, investor focus shifted to the ongoing Eurogroup meetings.
With news emerging that there was little chance of a definitive deal being struck with Greece over their debt in the next few days, sterling advanced steadily against the euro throughout the day, pushing to a two-week high against the euro. Sterling also improved against the US dollar throughout the day, as investors looked towards Wednesday’s quarterly inflation report from the BoE. The central bank is expected to forecast an increase in inflation over the next year, which would increase pressure on the central bank to raise interest rates.
Today we have the release of manufacturing production figures from the UK, with the recent slowdown in growth expected to continue, with only a 0.3% increase in production forecast. Any deviations from expectations could affect sterling markets.