Sterling struggled on Monday as it fell to a fresh five-and-a-half year low against the US dollar (despite the US national holiday), but it did make marginal gains against the euro.
As trading opened in Asia on Sunday night, sterling fell to a new multi-year low against the US dollar, before finding support and strengthening throughout the morning thanks to the release of UK housing inflation figures; at 0.5%, this represented the first increase in inflation in three months. With relatively low trade volumes thanks to the US bank holiday, sterling struggled to break free of its recent poor run of form, and will require strong data this week to maintain a positive trend.
Today sees the release of inflation figures for December. With the UK economy struggling to generate growth, we are expected to see inflation remain at 0.1% although an unexpected increase could give sterling a temporary boost.