nd of month flows also dominated trading with this, as is traditional, which provided good support for the greenback. Sterling was particularly hard hit. The Pound fell off a cliff during morning trading, slipping by well over a percent in a little over five hours before retracing just under a half of its losses before the London session was done. A large deal involving GlaxoSmithKline purchasing Novartis’s 36.5% stake in their consumer healthcare joint venture was cited as the trigger for the unwinding in long Sterling bets.

This encouraged traders to take profits following the Pound’s recent impressive rally. The UK currency had gained around 3% against the US Dollar since the beginning of March alone prior to trading yesterday, a sharp upward move that many investors may have deemed as somewhat excessive given the UK economy is currently the slowest growing of all the economies in the G7. Month-end flows could continue to be a factor in the UK today, with the CBI Distributive Trades survey this morning the only data release in an otherwise quiet session.

ECB’s Liikanen hints September QE end not guaranteed

The Euro also bore the brunt of yesterday’s resurgence in the US Dollar, although to a slightly lesser extent than the Pound.

The EUR/USD rate was kept under further pressure from comments from European Central Bank member Liikanen, who hinted that a tapering in the bank’s quantitative easing programme in September was not a foregone conclusion. Yesterday’s business confidence data for the Euro-area was also soft. The monthly business climate index slipped to 1.34 from 1.48 after investors had eyed a 1.39 reading. This fall in sentiment, combined with recent disappointing PMI data that we’ve seen, is a worrying sign that could suggest the recovery in the Eurozone economy is losing steam following an exceptionally impressive few months.

Attention this afternoon will shift to the updated US GDP data for the fourth quarter, which is expected to show that the world’s largest economy expanded by an upwardly revised 2.7% annualised. The core PCE index, the Fed’s preferred measure of inflation in the US, will also be under the microscope when released at 13:30 UK time.