A tough week for sterling saw it lose ground across the board as more members of the Bank of England’s (BoE) monetary policy committee sought to distance themselves from comments hinting at a hike in interest rates later this year. With little economic data released on Monday, sterling had already slipped from its multi-year highs even before inflation report hearings on Tuesday. Drawing particular attention to record low unemployment, BoE Governor Carney alluded that there was more spare capacity in the British economy than previously realised. This saw sterling fall against the majority of its trade partners as investor confidence thanks to a possibility of an increase in interest rates vanished.
Yesterday, however did see a turn-around for sterling, with Governor Carney unveiling the Bank of England’s new measures to cool the housing market. He outlined a sterner cap on lending levels and a tougher screening processes for prospective buyers. The sentiment that these measures would not derail the economy enabled sterling to recover most of the losses suffered earlier in the week. Today sees the release of figures outlining growth in the UK economy which, with growth expected to remain consistent at 0.8%, provides a stark contrast to the situation in the US.