020 7898 0500Sterling touched a two-week high versus the euro yesterday, after its biggest one-day gain in months. Positive inflation data from the UK on Monday, coupled with the likelihood that it will be MPs who have the final say on Brexit terms, helped prop sterling up.
Once again, economic data is playing a background role with politics in the limelight. However, sterling’s small run of form could be short-lived, as political sentiment shifts from day to day. We would need a concrete confirmation and a ruling from the courts that MPs would have to ratify any Brexit agreement before a sustained sterling rally could be expected. Germany confirmed that it would not enter negotiations with the UK until Article 50 is officially triggered, which helped to stem sterling strength somewhat.
Today sees UK retail sales figures released. As economic data is has been largely discounted, it will be interesting to see if a material divergence from expectation will actually affect the pound.
