Sterling suffered a mixed day in which it lost ground against the euro while making marginal gains against the US dollar as members of the Bank of England (BoE)’s Monetary Policy Committee spoke about inflation. Following mixed messages from the BoE recently, Governor Carney assured MPs that recent monetary policy discussions had centred on the pace and timing of interest rate rises, and that economic ‘slack’ had fallen over the previous quarter. Sterling saw little effect from these hearings, however, with lingering concerns over downside inflation risks expressed by some members serving to blunt any impact.
Movement was seen against the US dollar during the afternoon, however, with sterling weakening on the back of US economic growth being upwardly revised to 3.9%. Sterling soon recovered, with consumer confidence in the States falling to its lowest level since June, which sent the dollar falling across the board.
Today sees UK economic growth in the spotlight, with the second estimate for the previous quarter’s growth released this morning. With the markets currently sensitive to negative UK news, any downward revision could see sterling fall weaken.