With no major economic data out of the UK yesterday, sterling finished the day slightly lower against both the euro and US dollar. Early trading was driven by investors’ reaction to the US Treasury’s recent ruling that limits the tax benefits for companies that move their headquarters overseas. Combined with anticipation over European manufacturing growth data, this saw sterling drift lower throughout the early morning. With German manufacturing having slowed throughout August, sterling was able to recover much of its lost ground later in the day. Meanwhile, poor housing inflation data from the US also saw it make gains against the dollar.
As there are no major data releases from the UK today, we will look to new home sales data from the States, which investors will be keeping an eye on, in case it bucks the recent trend of poor housing data. Elsewhere, the German Ifo Business Climate survey will provide insight into future economic activity in the country.