A tough week for sterling as the flight to safer haven currencies such as the euro, Swiss franc and Japanese yen gained momentum. Sterling fell to a fresh 13-month low against the euro over mounting fears of a UK exit from the European Union.
Despite a relatively small volume of economic data released from the UK, sterling continued a recent poor run of form against the euro, and on Monday fell to the lowest level since January 2015. Despite initially also struggling against the US dollar, sterling found some support as US Federal Reserve Chair Janet Yellen warned that global deflationary risks could impact the chances of further interest rate hikes in the US this year.
Wednesday’s manufacturing production figures provided no respite for sterling, coming in below expectations to record a contraction of 0.2% throughout January. Sterling saw a significant loss of value on Thursday morning as European Central Bank (ECB) member Nowonty warned that a UK exit from the EU could result in a loss of privileges for the City of London. This saw sterling fall to its lowest level of the week against the euro, as well as dropping further versus the US dollar.
There is no major economic data released from the UK today, with investors awaiting the release of retail sales figures from the US this afternoon.