Sterling found itself in a difficult position heading into this week. Significant losses at the end of the week had left sterling vulnerable, falling to the lowest level since May versus the US dollar. But despite little UK economic data being released throughout the week, sterling has made gains against both the euro and the US dollar.
This week, sterling lost ground on Monday morning as analysts warned of the prospect of a weak employment report on Wednesday. However, sterling soon recovered as belief grew that the European Central Bank (ECB) would look to expand their quantitative easing program before the end of the year. With markets quiet again on Tuesday, sterling benefitted further from the lack of economic data, making marginal gains across the board. Wednesday saw the release of the latest labour figures from the UK. Despite growth in average earnings missing expectations, a decline in unemployment to a 2008 low of 5.3% saw sterling reverse many of the losses seen last Friday.
Sterling made a strong start to the day on Thursday, gaining ground against the euro as European Central Bank (ECB) President Mario Draghi warned against clear downside economic risks. Despite this initial strength, sterling struggled throughout the afternoon and fell back against both the euro and US dollar, the latter which was somewhat boosted by comments from the US Federal Reserve.
A quiet day lies ahead for UK economic data releases, with attention turned to the US where retail sales and consumer sentiment figures will provide the most interest.