The pound nosedived on Tuesday, falling below $1.24 against the US dollar as rising fears of a no-deal Brexit left the UK currency tumbling.
Sterling was still struggling on Wednesday morning, with GBP/EUR flat at 1.1054, GBP/USD muted at $1.2390 and GBP/AUD subdued at AU$1.7679. Both GBP/CAD and GBP/NZD are trending lower, striking C$1.6198 and NZ$1.8464 respectively.
Looking ahead, the UK will publish its latest CPI figures, but will stagnating inflation be able to offset growing Brexit jitters?
What’s been happening?
The pound fell sharply in Tuesday’s trading session, touching new multi-month lows against most of its peers as Sterling sentiment fell off a cliff against a backdrop of rising Brexit uncertainty.
These renewed Brexit concerns came in the wake of a hustings attended by Tory leadership candidates Boris Johnson and Jeremy Hunt, who both rallied against the idea of including the Irish backstop in any withdrawal deal agreed with the EU.
This drove GBP exchange rates lower as it stoked fears that a no-deal Brexit will be unavoidable.
The Brexit malaise saw the UK’s latest employment figures largely side-lined, despite data showing that domestic wage growth accelerated at its fastest pace in over a decade in May.
The euro was also left on the back foot on Tuesday, with the single currency being undermined by a gloomy Eurozone sentiment index.
Meanwhile, the US dollar trended higher during Tuesday’s European session, with some robust domestic retail sales helping the ‘Greenback’ take advantage of the weakness in some of its peers.
What’s coming up?
The most notable data release today will be the UK’s latest CPI, which is expected to show that domestic inflation held within the Bank of England’s (BoE) target range at 2%.
However, as this result is unlikely to have an impact on BoE monetary policy the data will probably fail to influence the pound.
Meanwhile, the final release of the Eurozone’s CPI figures from last month could lend some support to the euro if core inflation is confirmed to have accelerated in line with the preliminary reading.
Finally, the absence of any notable US economic data could limit US dollar movement today, especially if it places the focus back on the Federal Reserve and expectations that it will lower interest rates this year.