Positive UK economic data has been ignored by investors as we have seen sterling lose ground across the board in the last few days ending the week down against most if not all other major currencies. Sterling traded largely sideways on Monday, as a lack of data saw markets remain flat throughout the day. Disappointing inflation from the Eurozone on Tuesday ignited the markets, as sterling rose to a fresh two-year high against the euro. However, optimism over sterling was short lived as sterling fell to a two-week low against the US dollar due to Bank of England (BoE) concerns over poor wage growth.
Poor manufacturing growth data from the UK prevented sterling from pushing higher on Wednesday, as it closed the day at a similar level to where it started. Robust growth from the construction industry could not prevent sterling from falling steeply against both the euro and US dollar on Thursday. Despite the strongest growth data since February, sterling fell against sustained US dollar optimism, and a surprisingly long-term quantitative easing plan put forward by the European Central Bank (ECB). After remaining strong against the euro through much of the week, sterling fell to a two-week low against the single currency.
Today sees the release of growth data from the services industry. Having shown strong growth comparable to the construction industry over recent months, further strength could allow sterling to recover some lost ground following a bad week.