Sterling fared better on Wednesday, seeing the strongest single day of gains against the euro in over a week as Chancellor George Osborne revealed that the UK economic growth forecast for 2016 had been revised upwards to 2.4% from 2.3%. A tough start to the day had seem sterling fall across the board, and there was little news released throughout the morning to support the currency. However, with an upgraded economic growth forecast and a 2020 budget surplus on track, sterling recovered strongly throughout the afternoon.
Sterling did struggle to some degree versus the US dollar, with US unemployment claims falling further than expected, moving closer to a four-decade low. With this resilience in the labour market likely to increase pressure to raise interest rates in the US, sterling saw a muted benefit against the dollar. Today’s Thanksgiving holiday in the US promises to result in muted trade volumes, and with little significant economic data set to be released from the UK, investors will be looking forward to Friday’s estimate of economic growth over the past quarter. However, events elsewhere may have an impact on sterling strength.