Sterling recovers slightly
Daily Currency Update
GBP - British Pound
Sterling remains low against the US dollar and euro, but has started to find some footing against these currencies. The UK’s rising inflation is still a concern to investors as higher inflation, poor economic growth and high unemployment contribute to fears of stagflation.
However, one of these factors was countered yesterday as UK economic growth for Q2 was revised higher to 5.5% against the market expectations of 4.8%.
GBP/USD touched lows of around 1.3417 this week, but a slight recovery saw it touch around 1.3500 yesterday. GBP/EUR, which reached around 1.1557 on the fall this week, nearly rose back up to 1.1650.
Key Movers
The US dollar continued to gain as the US Federal Reserve prepares to reduce its $120 billion of monthly government bond purchases, and potentially begin raising rates in 2022. This is earlier than investors had expected and shows confidence in the US economy.In addition to this, US House Speaker Nancy Pelosi said that legislation would keep services functioning, prevent furloughs for hundreds of thousands of workers, and protect the economy. The House vote on the $1.2 billion infrastructure bill has been postponed.
As markets remain risk-off, investors have been buying the US dollar this week as a safe haven currency. A move that has seen the US dollar index peak at 94.47 and it currently sits above 94.30. EUR/USD touched around 1.1565 at the lows this week and AUD/USD 0.7174.
Expected Ranges
- GBP/USD: 1.3410 - 1.3525 ▲
- GBP/AUD: 1.8620 - 1.8720 ▲
- GBP/NZD: 1.9470 - 1.9610 ▲
- EUR/USD: 1.1520 - 1.1650 ▼