Lots of sterling movement this week as uncertainty in world markets unsettled the currency markets. Sterling made a little bit of ground against the US dollar over the course of the week but fell from recent multi-year highs against the euro. A quiet start to the week saw sterling drift lower against the euro despite a slowdown in the level of German factory orders throughout the past month. Further poor data from the Eurozone was ignored, as investors remained sceptical of supporting sterling whilst still at such a high level against the euro. Sterling did find some respite on Thursday due to events in the Eurozone, with European Central Bank (ECB) President Mario Draghi admitting he had seen signs of the recovery slowing down.
A more positive week against the US dollar has seen sterling have its first positive week against the dollar for 3 weeks. Sterling made sustained gains against the dollar on Monday over concerns surrounding the uneven nature of the US labour market. This week has also seen a number of members of the Federal Reserve indicate that they don’t believe rates should rise until at least mid-2015. By dampening speculation over an imminent increase in interest rates, sterling was able to strengthen significantly against the US dollar.
Following the decision yesterday to leave the UK interest rate at 0.5%, today sees little data from the UK with the latest trade balance taking the spotlight.