Sterling posted its biggest slide in two months on Wednesday after poor British industrial output data added to the sense that a month-long recovery in the currency may have run its course. The weak performance by manufacturers may raise doubts about how much of a boost factories are getting from the big fall in sterling since Britain voted in June to leave the European Union. The monthly slide was largely attributed to a temporary shutdown of a major oilfield but it fuelled speculation that the economic data may finally be turning lower after proving more robust than many had forecast after the Brexit vote.
Prime Minister Theresa May on Tuesday accepted the opposition Labour Party's demand she give details of her plan for leaving the EU before formal talks begin, but she asked parliament to back her target of launching the talks in March. That provides no new details on what has become the key issue for markets: how "hard" a break from Europe she will aim for. But it reduces the chances of a delay, previously read by investors as supportive of greater compromise in the process.
The euro gained slightly on the dollar on Wednesday as investors focused on tomorrow's European Central Bank meeting for possible indications on when the central bank may begin paring bond purchases under its quantitative easing program.
The euro has been the main focus for traders this week after Italian Prime Minister Matteo Renzi's loss in a referendum over constitutional reform on Sunday.
After initially dropping on the news, the euro rallied strongly on Monday and has since held below three-week highs against the dollar as investors wait on the ECB. The euro could extend gains if the ECB indicates a time limit to any QE extension, as investors watch for indications of tapering.
12.45 – EUR : Minimum Bid Rate; Forecast to stay at 0.0%
13.30 – EUR : ECB Press Conference following minimum bid rate
13.30 – USD : Unemployment Claims; Forecast at 272k against previous of 268k