With little supporting data from the UK, sterling struggled to make an impact on Wednesday, drifting lower against the euro and stronger against the US dollar. The reduction in the trade balance deficit to £9.6 billion caused muted gains in the markets, sterling continued to make steady gains against a US dollar which has seen investors seeking to cash in profit from its recent strong run before the end of the year.
In contrast to this, sterling struggled against a resurgent euro which shrugged off concerns over instability in Greece to post gains across the board yesterday. We also heard from Bank of England (BoE) Governor Mark Carney in an interview published yesterday in which he reiterated his commitment to gradual interest rate rises and warned again that UK inflation could fall further, strengthening belief that a rate hike is not likely until late 2015.
Sterling is likely to see movement dominated by events elsewhere today. Interest will be focused on the value of the European Central Bank (ECB)’s latest round of long-term bank loans, along with retail sales data from the US.