A positive week for sterling has seen it gain ground against both the US dollar and the euro, following encouraging comments from Bank of England (BoE) Governor Mark Carney on the UK’s current level of inflation. Sterling reached the highest level against the euro since December 2007, thanks to continued uncertainty over the Greek debt situation – after a member of the European Union Commission commented on Thursday that the Greek bailout could well be larger than forecast. A more mixed performance was seen against the US dollar, with sterling initially rising to the highest levels since the turn of the year following dovish comments by Federal Chairwoman Janet Yellen. However, with US core inflation data showing that it had risen above expectations in January, sterling dropped back steeply against the US dollar.
A quiet day for UK data lies ahead, with attention focused instead on inflation data from Germany. and preliminary economic growth data from the US.