Sterling got off to a shaky start on Wednesday amid speculation that the Bank of England (BoE) were to vote 8-1 to keep interest rates at their historic low of 0.5%. Sterling fell across the board, losing over a cent against the US dollar before the minutes revealed that the vote had in fact remained split at 7-2. Despite this, sterling failed to mount a meaningful recovery as the minutes revealed concerns over stagnating wage growth in the UK and a fear that premature tightening of monetary policy could leave the UK vulnerable to global economic weakness. Despite regaining ground throughout the morning, sterling fell away again against the dollar on the back of a pick-up in US inflation. Sterling finished the day improved somewhat against the euro as the BoE re-affirmed their estimate of 0.9% growth throughout the UK economy in the previous quarter.
Today sees the release of retail sales data from the UK. With confidence in the UK economy shaken in recent weeks, a positive result here would demonstrate increased consumer spending, possibly predicating a rise in industrial output. We also have key data being released in the Eurozone which could generate sterling/euro movement.