Sterling continues it's slide against the euro

Sterling continued its slide against the euro yesterday, finishing at 1.1129.

• In early trading yesterday the euro rose against the pound, as investors continued to absorb last week’s policy decisions from the Bank of England and the European Central Bank. Most appear to consider the BoE’s decision to extend its quantitative easing program by an another £50 billion as negative news, whereas the ECB’s decision to cut interest rates and boost credit through the purchase of covered bonds is being seen as decisive.
  
• Wednesday’s BoE quarterly inflation report also contributed to the single currency’s early gains, with some analysts forecasting further bad news for the UK economy.
  
• Speculation ahead of HSBC’s first quarter results also contributed to the selling pressure on the pound yesterday morning, primarily because the UK is so dependent on the banking sector.
  
• When they came, the bank’s results were poorly received by the market after it admitted profits were swelled by record results in its investment bank. This further extended sterling’s losses yesterday afternoon as the FTSE 100 fell markedly.
  
• In addition, HSBC’s chief executive, Michael Geoghegan, warned it was too early to see any ‘green shoots’ in terms of an economic recovery, despite an increase in consumer confidence. This further weighed on the pound into the afternoon as the FTSE 100 fell further, eventually closing the day down 26.59 points at 4435.50.
  
• In early trading so far today, sterling has continued to weaken against the euro as investors continue to digest last week’s interest rate decisions and yesterday’s banking results.
  
• There are no major announcements due in the eurozone today, however at 9.30 BST there are some important pieces of data out in the UK, namely the Goods Trade Balance for March, Year-on-Year and Month-on-Month Industrial Production and Manufacturing Production figures and March’s Total Trade Balance.