After a quiet start to the day, sterling struggled throughout the morning as the September UK services purchasing managers’ index (PMI) release highlighted the slowest level of growth for two-and-a-half years. This ensured a swift reaction from the markets, and the British currency came under pressure across the board. Together with the announcement that Nomura had pushed back their expectations for a UK interest rate hike to May 2016, sterling then dropped close to the recent five-month lows against both the euro and US dollar. With little economic data released throughout the afternoon, and US services PMI also disappointing, sterling was able to recover some lost ground, ending the day largely where it started versus the euro.
Today sees no economic data of note released from the UK, with attention turned instead to the US where the latest trade balance deficit will be released. European Central Bank (ECB) President Draghi is also scheduled to speak during the evening, and any comments relating to the ECB’s Quantitative Easing programme could have significant effects on sterling’s standing against the single currency.