Sterling managed to recover some of the losses against the euro from its early morning selloff but failed to recover against the US dollar due to the expected interest rate hike later today.
The aggressive drop in value at 8 am yesterday was slightly unexpected after limited movement over night, following the announcement that Parliament had given the Prime Minister permission to start the Brexit process.
Meanwhile, there was further chatter regarding a second Scottish independence referendum. Following on from Scottish National Party leader Nicola Sturgeon’s announcement on Monday, the party’s deputy leader, Angus Robertson, made his feelings clear, insisting the vote should take place as early as autumn next year – rather than ‘see the Prime Minister drive us off a Brexit cliff.’
In light of the political calendar, May has highlighted that she will not trigger Article 50 until the end of the month. There was some speculation that it could have been this week.
Looking to the day ahead, we have the key employment data set due for release. The headline number is expected to remain steady, but it is the claimant count that will be of concern. Following the previous two months of declines, it is expected that the number of individuals claiming unemployment benefits will increase. In addition, the average earnings figure is expected to decline for the third consecutive month in a row.
With inflation forecast to continue its upward trend, it may not be long before it outpaces average earnings. We find out the inflation reading next week.