Sterling saw mixed fortunes on Monday, recovering from a recent two week low against the euro, but struggling against a stronger US dollar. With little economic information from the UK released yesterday, sterling found itself mainly affected in the main by news elsewhere.
A significant down-turn in UK housing inflation to -0.1% throughout May saw sterling make a poor start to the day – however, lingering trading concerns in Greece did ensure that sterling pushed higher against the euro. European Central Bank policy maker Mersch stated that the rules of a bailout are non-negotiable, and with Germany unwilling to talk about an aid package as yet, the situation looks set to drag on close to the June 5th deadline. In contrast to this, sterling fell away from its recent five month high against the US dollar to a one week low, as the American currency found support across the board.
Today sees the release of UK inflation data for the month of April. Following a tough two months where inflation has remained at 0%, this is set to continue for another month at least. The underlying inflation rate for the core constituents is expected to rise to 0.4% from 0.2% which would be viewed as positive for sterling.