It has been a tough week for sterling, losing significant ground against both the euro and US dollar in a week with no significant economic data releases to support the beleaguered currency. A steady start to the week saw sterling trade largely sideways against the US dollar, while actually gaining ground against the euro in the wake of the Greek parliamentary elections.
With Syriza sweeping to a dominant victory and speculation that the European Central Bank (ECB) would expand their quantitative easing (QE) programme, sterling was able to reverse its recent losses against the euro. However, with sentiment over UK industrial growth turning negative and ECB President Mario Draghi confirming that there would be no extension to QE, sterling fell to its lowest level against the euro since late August 2015. Alongside this, a number of market commentators and banks, including RBS, have pushed back their forecasts on when the Bank of England will hike interest rates. This has created a wider struggle for sterling, which fell again to the lowest level against the US dollar since the start of September.
Today’s most eagerly anticipated data will come from the US, where final confirmation of economic growth over the past quarter will be released. Following a poor week for sterling, a strong reading here could push the UK currency to fresh recent lows against the US dollar.