terling slipped by close to 1% from Tuesday’s close, despite a relatively strong labour report released yesterday morning in the UK that showed wage growth in the country had accelerated to its fastest pace in over a year.

Across the pond, the latest inflation data out of the US continued to support the Federal Reserve’s plans to hike interest rates multiple times this year. Chair of the Federal Reserve Janet Yellen also provided good support for the US Dollar yesterday, suggesting that the Fed was ready to raise interest rates quickly in the US this year. We think her comments were in line with our expectation for an additional three rate hikes by the central bank before the end of 2017.

Meanwhile, the Euro dipped slightly ahead of today’s European Central Bank meeting. We expect very little in terms of new information from the European Central Bank this afternoon, and we’ll certainly not see any alterations to its existing policy.

President of the ECB Mario Draghi is unlikely to shift his stance from the December meeting and should essentially reiterate December’s message. Barring any massive surprises we should see a slightly more subdued reaction in the Euro than is generally the case following Draghi’s press conference at 13:30pm today.

Major currencies in detail

GBP

Sterling fell 0.6% during London trading on Wednesday, despite a decent labour report.

Yesterday’s labour report was, on the whole, fairly impressive. Average earning growth excluding bonuses increased to its highest level in a year in the three months to November, rising from 2.6% to 2.7%. Including bonuses, wage growth also increased to 2.7%, well above the current rate of inflation meaning real wage growth remains firmly positive in the UK.

Moreover, unemployment remained unchanged at a decade year low 4.8%, suggesting that the labour market situation in the UK remains favourable, even following June’s Brexit vote.

With no economic data in the UK today, Sterling traders will turn their attention to the latest retail sales figures on Friday morning.

EUR

The Euro fell 0.6% against the Dollar on Wednesday, largely driven by broad US Dollar strength.

Inflation in the Eurozone yesterday continued to show encouraging signs of improvement. The headline figure for December came in unrevised at 1.1%, its highest level in three years. While this remains comfortably shy of the 2% target, we think that the general improvement in economic conditions in the Eurozone means that we’re unlikely to see any additional stimulus from the ECB in the immediate future.

Attention today will be firmly on Mario Draghi’s press conference at 13:30 UK time. The ECB will announce both its deposit and main refinancing rate at 12:45 UK time, although no change in policy is expected.

USD

The US Dollar index increased 0.6% on Wednesday, buoyed by strong data and hawkish comments from Federal Reserve Chair Janet Yellen.

Headline inflation in the US rose above 2% for the first time in two-and-a-half years on Wednesday. Price growth increased to 2.1% in December from 1.7%, largely driven by an uptick in oil prices, which have increased back above $50 a barrel this year.

Additional news out of the US yesterday was also fairly supportive for the Dollar. Industrial production rose to 0.8% in December, a significant improvement on the 0.7% contraction recorded a month previous. The Dollar was able to shake off Tuesday’s comments from President-elect Donald Trump, who actively voiced his opposition to a stronger US Dollar.

Initial jobless claims and the latest housing data will be the main economic releases in the US today when announced at 13:30 UK time.