A mixed week for sterling saw vastly contrasting economic data releases from the UK and significant movement in the British currency. A slow start to the week saw sterling drift low against the US dollar ahead of an expected 0% adjustment in UK inflation in July; however, the surprise release of 0.2% helped sterling strengthen across the board as investors brought forward their bets on when the Bank of England (BoE) may raise interest rates.
No data of note was released on Wednesday, and sterling traded largely sideways against the US dollar. However, the euro performed with strength, as German politicians approved a third bailout plan for Greece – pushing sterling down against the single currency. Disappointing retail sales data on Thursday then pushed sterling to a one-week low against the euro, and it continued struggled against the rest of its major trade partners. However, a strong recovery against the US dollar throughout afternoon trading left sterling in a strong position as we head into Friday.
Attention turns to the Eurozone today, where the release of advance Manufacturing Purchasing Managers’ Index data from France and Germany will provide insight into the economic situation in these Eurozone powerhouses.