A tough start to the week has seen sterling lose ground across the board as the euro was able to capitalise on widespread US dollar weakness.
With no major economic data released on Monday, sterling’s movement was largely dictated by events elsewhere. With European Central Bank (ECB) President Draghi and Federal Reserve member Fischer both speaking during the day, sterling found itself under pressure as Draghi downplayed the current risks to the Eurozone. In addition, UK political uncertainty over the result of the upcoming UK election continues to undermine sterling as the currency fell to the lowest level in a month against the euro. With opinion polls continuing to point to a likely outcome of a hung parliament, we expect this uncertainty to unsettle sterling throughout April.
Today sees release of the February Consumer Price Index from the UK. This influential measure of inflation could boost the flagging currency if we should see any significant increase. However, with energy prices lingering at multi-year lows we are likely to see another weak reading here which could support sterling’s weakness.