A tough day for sterling on Wednesday saw it lose ground against a resurgent euro and fail to take advantage of poor inflation data from the US. While significant gains had been made on Tuesday in the wake of better-than-expected inflation data from the UK, a lack of economic data was always likely to weigh on sterling throughout Wednesday.
Confirmation that the German government had approved the latest Greek bailout proposal saw sterling fall sharply against the euro in the morning, before remaining relatively flat throughout the remainder of the day. US inflation hit 0.1%, missing the 0.2% expected level, but this data was largely ignored ahead of the release of minutes from the latest meeting of the Federal Reserve in the evening. Following the release of the meeting minutes, forecasts for an interest rate-hike in the US were been pushed back after several members of the Federal Reserve highlighted concerns they had about the Chinese economy and a sustainable labour market. Moreover, that the central bank wants to see inflation moving towards its target before considering an interest rate-hike.
Retail sales data from the UK will kick off today’s data run, with optimism that Tuesday’s surprise inflation increase could be accompanied by a jump in retail sales.