Sterling strengthened yesterday following inflation figures in the form of Consumer Price Index data, which fell to 1.7% from the previous level of 1.9%, a reduction in line with the forecast levels. After a topsy-turvy performance the day before, a reduction in core inflation provides justification for the Bank of England (BoE) to keep interest rates at a record low to support economic recovery. Although sterling performed well on the whole, comments from Mario Draghi, President of the European Central Bank (ECB) stating that he sees no risk of deflation saw euro pegging back some of sterling’s gains in the afternoon.
Today looks to be relatively quiet on the data front, with core durable goods orders from the US being the only major data release internationally. A measurement of change in the value of orders for manufactured goods that last for at least three years, it could indicate whether the economy has grown. This could see the US dollar recover the ground that it has lost this week, perhaps at the expense of sterling.
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