A tough start to the week for sterling has seen it lose ground across the board and at one stage was close to its lowest level since September 2013 against the US dollar. Sterling also continued to struggle against a resurgent euro, with economists united in their belief that we will see quantitative easing in the Eurozone next year. The only respite was against the commodity backed currencies which are being undermined by the falling oil price.
Yesterday’s Rightmove House Price report showed a sharp contraction in property selling prices of 3.3% throughout December. Today kicks off with the results of the Bank of England’s recent stress tests on UK banks, which could provide significant fluctuations in currency markets if any of the UK banks fail the tests. However, today’s main focus will be on inflation figures release. Inflation is already close to four-year lows, and the plummeting oil price threatens to push it even lower. Such a drop could undermine sterling further.