It was a quiet day overall in the currency markets, with a US Bank Holiday in observance of President’s Day resulting in reduced trade volumes.
Having opened the day up against the euro sterling only held onto those gains as the day progressed rather than build on them. This was despite seeing the largest increase in eight months for UK Housing Inflation Data at a figure of 2.9% and despite European Central Bank (ECB) President Draghi, who spoke in the afternoon, raising his rising concern over the global economy, and reiterated the ECB’s desire to review their policy stance in March. However, sterling did record its second straight day of gains against the euro, unwinding more of the losses suffered in the previous week but it could not repeat this performance against the US dollar, with investors backing the dollar ahead of Wednesday’s release of minutes from the latest Federal Reserve meeting.
Today will see the release of UK inflation figures from the previous month which are expected to show modest price growth of 0.3%. With sterling having moved significantly lower recently; any further rise in inflation could see the currency receive a boost.