Pound continues to slide against the euro

The pound continued Thursday’s slide against the euro on Friday, closing the day at 1.1169.

• In early trading Friday sterling recovered some of the previous day’s losses against the euro, as the market continued to digest Thursday’s policy decisions from the Bank of England and European Central Bank.
  
• Stronger-than-forecast Industrial Productions data for March released in Germany strengthened demand for the single currency mid-morning. Month-on-Month came in at 0%, much better than the -1.3% expected and the -2.9% recorded in February, whilst Year-on-Year was at -20.4%, again a rise from the -20.6% recorded last month and the -20.9% expected.
  
• However, strong London equity market performance capped the single currency’s gains to some extent, with the FTSE 100 up 1.7% at one point.
  
• But Thursday’s policy decisions by the BoE and ECB weighed on the pound throughout the day. Both involved some elements of surprise, but in the end news that the BoE was to expand its asset purchase programme by £50 billion to £125 billion was taken as a negative for sterling and a positive for the euro.
  
• The ECB’s decision to cut interest rates by a quarter point and unexpectedly buy some 60 million euros of covered bonds also contributed to the single currency’s gains. Investors were pleased the central bank was taking decisive action, however limited, to stem the region’s economic decline.
  
• In early trading today the pound has resumed its slide against the euro as the markets continue to digest last week’s announcements. There are no major data releases due in the UK or eurozone today.