The pound initially opened last week’s session on stable footing as GBP investors welcomed Scotland’s lifting of its remaining coronavirus restrictions.
The pound initially held firm at the start of last week as investors were mostly focused on developments in other markets.
GBP was forced to retreat on Wednesday however as the UK published its latest trade balance figures, which revealed that Britain’s trade deficit climbed to -£2.8bn in November, while October’s figure was revised from -£1.4bn to -£2.2bn.
Sterling sentiment remained subdued on Thursday as a study commissioned by London Major Sadiq Kahn suggested that up to half a million jobs and up to £50bn worth of investment could be put at risk by a ‘hard’ Brexit.
However, the pound was able to rally at the very end of the week’s session as reports suggested that Spain and the Netherlands were both looking to support a ‘soft’ Brexit that would allow the UK to retain close ties to the EU.
Looking ahead to this week’s session, the main focus will undoubtedly be on the release of the UK’s latest CPI figures as economists forecast that UK inflation dipped last month.
While the drop may dent the chances of a rate hike from the Bank of England (BoE) in 2018, it may relieve some of the concerns about the gap with wage growth.