On the whole a positive week for sterling which has seen the currency move from strength to strength against the US dollar, regaining ground it lost last week, but it made only marginal gains against the euro. This performance against the euro is a slight surprise as the markets are stating there is an 80% chance of Greece defaulting on its debt. The problem for sterling is the uncertainty surrounding the outcome of the UK General Election which is now only three weeks away.
Sterling saw a small downturn on Tuesday as confirmation was released that UK inflation had remained at a record-low 0% throughout March. Despite this, the UK currency soon recovered against the US dollar, as disappointing retail sales data from the States saw sterling gain over a cent against the US currency. Further disappointing US economic data was reported on Thursday, showing that unemployment had increased for the second month in a row – this allowed sterling to rise to a 2-week high against the US dollar.
Today sees the release of labour data from the UK, with average earnings over the past 3 months likely to have the largest impact on investor sentiment.