The main event of the day came late with the announcement from the Federal Reserve following their monthly meeting in which they confirmed that quantitative easing was at an end. They also confirmed that the pace of recovery in the labour market was positive. This increased the perception that interest rate increases were likely in the not too distant future and as such we saw the US dollar gain nearly two cents against sterling in very short order.
The day had started quietly for sterling when UK mortgage approvals disappointed, falling to 61k against a consensus forecast of 63k. With markets tentative ahead of the release of the FOMC statement, this saw sterling lose value across the board before stabilising over the afternoon. Today will see the focus remain on the US, with advance economic growth figures expected early afternoon, and Federal Reserve chair Yellen speaking in the evening. We will also see further inflation data from Germany, where euro speculators will be hoping for some good news from Europe’s largest economy.