Sterling bounced back yesterday from the heavy losses of Tuesday, recovering much of what it had lost against USD and all that it had lost against the euro. This morning the upward trajectory has continued, following excellent news on the UK economy, where the services sector grew by 0.5% in January.
The midweek losses largely came from central bank comments here and in the USA. America continues to face sticky inflation, according to Federal Reserve chair Jerome Powell, whose comments were considerably more hawkish than the Bank of England’s own interest-rate setter Swati Dhingra. She advocated holding interest rates where they are to avoid damaging the economy.
While the gain has been only back to Tuesday’s rates against USD and EUR, there have been significant rises against, for example, the Australian dollar, where sterling is close to reaching its highest point for a year.
Data from the UK has been positive this week, with almost all indicators in the green. That included new car sales, construction PMI, retail sales and house prices, which surprised the markets by rising, at least according to the Halifax House Price Index.
The first big event of Budget-week will be unemployment data on Tuesday, but with much happening in the US data- and business-wise there could well be movement at any time.
GBP/EUR past year
