Expectations of further monetary easing kept the pound low agains the euro yesterday

Investors were cautious of taking sterling positions yesterday, with the pound losing 0.5% against the single currency to close at 1.1404.

• Sterling relinquished its recent gains against the euro yesterday as speculation of further easing by the Bank of England later this week overshadowed the market.
  
• Analysts have noted that policy expectations will be the main driver of sterling this week, with the majority of forecasters expecting the rate to hold steady at a record low of 0.5%.
  
• The single currency was also assisted by a stronger-than-forecast factory orders figure in Germany which reaffirmed the strength of the manufacturing sector’s recovery in the eurozone’s largest economy.
  
• In trading this morning, the pound has started to curb its losses, edging marginally lower, but holding around the 1.14 level.
  
• In the UK today, production data is being released at 09:30BST, with analysts forecasting a rise of 0.3% in July, a reduced figure from the previous month.