Sterling has struggled again this week, as further disappointing data has undermined the pound’s position as the best performing currency of 2014 in the first half of this year. A decrease in the rate of inflation to 1.6% for July was announced on Tuesday, which saw this figure drop away from the benchmark inflation figure of 2% set by the Bank of England (BoE). Unsurprisingly, this resulted in a sharp drop in sterling across the board, seemingly reducing pressure on the BoE to raise interest rates. This decline was reversed on Wednesday following the release of momentous minutes from the latest meeting of the Monetary Policy Committee, in which we saw two members voting for a rise in interest rates – the first time in three years. Investors looked to cash in as sterling rallied. Lower-than-expected retail sales data from the UK and a raft of positive economic data from both the US and Eurozone on Thursday saw sterling fall again, this time to fresh 4-month lows against the US dollar.
Today we see little of note from the UK, with the start of the Jackson Hole symposium in the US likely to take much of the focus today as both the heads of the Federal Reserve and European Central Bank make speeches.