Pound gives back gains

After last week’s rally for the pound yesterday saw is give up at least half of the gains it had made last week, falling over 1% against both the euro and dollar. There really was not any significant data and I suspect that the reason for the weakness was partly due to the strength we saw last week maybe being over exaggerated and of course there are always movements on the back of political/financial speeches and there were some positive comments made by members of the ECB yesterday.

If yesterday was day for the market to ‘move on the rumour’ today will almost certainly be a day of ‘moving on the fact’. We have a raft of UK inflation data releases due out at 9:30 which will give us an insight as to how the market is reacting to the current BoE policies and some expect inflation to be a high number which could well see a short term spike for the pound. You will imagine the markets will be treading somewhat cautiously over the coming months, with regards to how the BoE’s stance manipulates the markets, and this will likely be the case until incoming BoE governor Mark Carney gives a clearer direction to how he sees monetary easing panning out during 2014.

We also have a speech by ECB president Mario Draghi later today and again this will give clues to future policy and is likely to move the markets one way or another. Do keep in touch with your account manager here at Currency Index, especially if you have any imminent requirements.