This week was a mixed one for sterling, with significant movement against both the euro and US dollar. With a UK bank holiday on Monday affecting trade volumes, it was a slow start to the week – and sterling traded narrowly against its major trade partners. Better-than-expected services growth data throughout February was announced on Tuesday, but this failed to boost sterling against the US dollar as investors looked ahead to the release of minutes from the latest meeting of the Federal Reserve’s policy makers. However, an unexpected boost for sterling was seen on Wednesday thanks to the news of the largest energy merger in 10 years. With Shell expected to purchase a large amount of sterling to fund their takeover of BG Group, sterling garnered support.
Despite continuous election uncertainty resurfacing on Thursday, sterling maintained this strong position against the euro towards the end of the week. This could not be repeated against the US dollar however, as sterling fell to the lowest level in three weeks as markets reacted positively to the minutes from the Federal Reserve’s latest meeting.
Today we see the release of February production figures from both the UK industrial and manufacturing industries – and any unexpected increase in these figures could see sterling benefit against the euro.