A mixed day for sterling on Wednesday saw the British currency extend its recent gains against the euro while falling against the US dollar in the wake of better-than-expected labour data from the States and there being a “possibility” of a December US interest rate rise. Purchasing managers’ index (PMI) data from the UK services industry met expectations on Wednesday, showing steady growth throughout October. This comes on the back of three straight months of low growth for the UK, and suggests that we could be seeing a pickup in the wider British economy. Coupled with the recent dovish comments from European Central Bank (ECB) President Mario Draghi, this enabled sterling to reach the highest level against the euro since mid-August.
Sterling did see some positive movement against the US dollar yesterday morning, although this was eroded throughout the afternoon following the release of Automatic Data Processing (ADP) non-farm payrolls; this came in above expectations, and signalled a flurry of support for the US dollar.
Today is “Super Thursday” which sees the release of the latest interest rate decision from the Bank of England (BoE) along with minutes from the meeting plus inflation report. No change is expected in the voting pattern of the monetary policy committee, and investors will instead look to the BoE’s quarterly inflation report for any adjustment in growth targets moving forwards.