A turbulent week has seen plenty of movement for sterling up and down, but by the end of yesterday the down had prevailed with sterling having lost nearly three cents against the euro.
Following the release of minutes from the Bank of England (BoE)’s latest policy meeting on Wednesday, which highlighted the need to increase UK interest rates, sterling had actually gained ground across the board , before disappointing retail sales growth saw the currency fall sharply on Thursday.
A lack of significant economic data releases on Monday saw sterling fall across the board, with investors wary of backing sterling ahead of the release of minutes from the latest BoE monetary policy meeting. The release of these on Wednesday showed a belief among a number of members that increasing wage growth would apply pressure on the BoE to raise interest rates within the coming months. Investors reacted positively to this news, sending sterling soaring to the highest price in almost two weeks against the US dollar. Thursday saw the release of June Retail Sales figures which reported a contraction of 0.2% against an expected 0.4% growth. This saw sterling reverse many of the previous day’s gains as investors grew wary over the likelihood of an interest rate increase any time soon.
Today we see little significant economic data from the UK, with markets focused instead on the Eurozone, where German and French flash manufacturing Purchasing Managers’ Index (PMI) data will provide a welcome distraction from the recent Greek debt situation.