Sterling is dropping back today against the euro as equities fall

The pound edged up further against the single currency on Friday, but has lost its gains today following weaker equities.

• On Friday morning, investor confidence remained high following Thursday’s BoE decision to leave QE unchanged, which added economic stability.
  
• Equity markets also continued to rally, with the FTSE gaining another 0.5% to close up over 5000 pts, supporting the pound’s recovery.
  
• Additionally, the PPI index rose by 2.2% in August, far more than expected, which encouraged hopes that the recovery is strengthening.
  
• However, sterling’s advance was capped, with the price unable to reach above 1.1461, and trading remained tightly bounded throughout the day in a range between 1.1420 and 1.1440.
  
• In trading today, sterling has dipped back below 1.1400 as investors check their risk activity as equities markets have fallen.