Despite a poor start to the week, sterling recovered throughout the latter stages to head into Friday trading only slightly lower against the euro and US dollar when compared to Monday’s opening exchange rate. With no major economic data released from the UK throughout the week, movement has been largely dictated by rhetoric; the Chancellor and the Governor of the Bank of England both had their “moments in the sun” this week, or news from elsewhere.
With German manufacturing and business climate data beating expectations, sterling struggled against the euro throughout the early part of the week. Comments from the Bank of England (BoE) suggesting that interest rates in the UK could remain low for an extended period added to downward pressure on the sterling, and saw it fall to a three-week low against the US dollar. Despite this, sterling bounced back on Wednesday as UK Chancellor George Osborne revealed that the 2016 UK economic growth forecast had been revised upward. With Thursday’s thanksgiving bank holiday in the US dampening trade volumes on Thursday, sterling saw little further movement across the board on Thursday.
Today brings the release of the second estimate of UK economic growth throughout the previous quarter. The preliminary estimate of 0.5% came in below the expected level last month, and should these miss the forecast level again we could see sterling suffer.