Mixed Month for Sterling

1 February, 2017

Rob Bastin

As January comes to a close, it has been a mixed month for Sterling, finishing the month more or less where it started the year against the Euro, but managing to gain a few cents against the weaker greenback having tested 31 years lows in recent weeks. Yesterday’s trading was very much a continuation of this mixed theme with heavy losses suffered in the morning following some weaker eco-stats. Net Lending to Individuals, Consumer Credit, and Mortgage approvals all posted worse than expected figures as the pound slumped to a one-week low against the Euro.

This was further aided by a string of Euro-zone stats that followed, confirming that inflation was up to 1.8% on the year, from 1.1% previously, along with GDP growth holding at 1.8% when a dropped had been expected. There was also good news for unemployment with the headline rate falling to 9.6% from 9.7% when equally analysts were forecasting a negative increase to 9.8%. All this good news boosted the Euro against the pound and more significantly against the US Dollar where it has now recovered nearly 2 cents in just 24 hours reaching a near two-month high.

Sterling was able to recover its morning losses as we went into the afternoon US session, particularly against the weaker US Dollar where most of Monday’s losses were recovered. Today brings the new month and with it the usual run of daily data releases to get your teeth into. The next few days could be crucial for the pound with manufacturing PMI this morning at 9:30 am, followed by Construction on Thursday and Services on Friday. The Bank of England also meets tomorrow at midday with their quarterly inflation report. Tonight, however, the focus once again across the pond with the Federal Reserve first up to deliver their monthly Interest Rate Decision at 7 pm.