Yesterday BoE Governor Mark Carney dampened market expectations that the Monetary Policy Committee (MPC) was about to enter a fresh tightening cycle after stating that any future hikes would be limited and gradual.
Also weighing on sterling is uncertainty ahead of Theresa May’s Brexit speech on Friday, as a row continues to embroil the government following controversial comments from Foreign Secretary Boris Johnson.
Mr Johnson claimed in an article that leaving the EU could free up £350 million per week, much of which could be spent on the NHS – repeating a claim that caused much controversy during the referendum campaign.
The suggestion was made in a 4,000 word article in The Daily Telegraph and has led many to speculate that Mr Johnson is attempting to undermine Theresa May’s leadership.
It was later suggested that Mr Johnson had told friends he would quit the front bench should the Prime Minister accept an agreement that involved the UK paying for the right to access the single market.
Responding to reporters in New York, Mr Johnson rubbished the idea that he was about to quit if Friday’s speech failed to meet his expectations.
In response to a question on whether he would resign, the Foreign Secretary said; “Of course not. We’re going to deliver a fantastic Brexit, we’re working together to make sure that Britain can take advantage of all the opportunities that Brexit provides.”
Mr Johnson’s article – and the ensuing political fallout – have been the focus of attention in the run-up to Mrs May’s speech, which will make it harder for the Prime Minister to convince audiences in the EU and the UK that the government has a cohesive, unified approach to the divorce talks.
Meanwhile, the euro has been pushed higher today following the latest economic sentiment surveys from the Centre for European Economic Research (ZEW).
Assessments of the Eurozone and German economies from financial experts have improved sharply on the previous month, with the Eurozone-wide index climbing from 29.3 to 31.7, while the German index beat forecasts of a rise from 10 to 12 to jump to 17.
Also providing support for EUR was a large rise in the current account surplus for the currency bloc.
On a seasonally-adjusted basis the Eurozone current account surplus increased from an upwardly-revised €22.8 billion to €25.1…