Uncertainty surrounding global events and financial markets has seen sterling lose significant ground against a wide range of currencies since the start of October. At one time this week it had lost nearly four cents against the euro, three cents against the US dollar and similar amounts against currencies such as the Australian dollar in the two plus weeks since the start of the month. The key driver for this has been the realisation that rises in UK interest rates are not likely to happen any time soon especially as Tuesday saw the release of UK inflation data which came in below expectations at 1.2%. This contrasted with unemployment which has fallen to an 8-year low but analysis of the underlying data highlighted disappointing wage growth figures and surplus capacity issues.
The one saving grace for sterling has been the fact that there are significant problems elsewhere and we saw a pick up against the US dollar on Thursday of this week as talk of continuing the US programme of quantitative easing began to emerge. Another quiet day on the data front for sterling lies ahead, as most eyes will be trained on US Federal Reserve Chair, Janet Yellen who will be speaking early in the afternoon.