Sterling mounted a strong recovery against the euro on Tuesday, whilst a late rally from the US dollar saw sterling reverse many of the gains it had enjoyed throughout Monday.
Yesterday, fears around a global equity crisis diminished somewhat and sterling was able to capitalise on a besieged euro which found itself losing many of Monday’s gains across the board. With fundamental data releases seemingly ignored by investors, sterling moved close to the level it closed at against the euro on Friday. Despite pushing to a fresh one-and-a-half month high against the US dollar throughout the day, better than expected consumer confidence data from America saw the dollar strengthen considerably throughout the afternoon to recover much of the ground it had previously lost.
Another quiet day in terms of economic data from the UK lies ahead, with investor attention largely drawn to the US where we will see the release of durable goods orders. Following this, comments from Federal Reserve member Dudley will be eagerly awaited, and could provide clues pertaining to future monetary policy in the US. Moreover, shifts in the foreign currency market will largely be dictated by risk sentiment caused by developments in the global equity markets.