Pound rallies as UK GDP rebounds
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Daily Currency Update
The pound has railed over the past 24 hours with GBP/USD pushing back above 1.2850. The first reason for the move higher was comments from Bank of England Chief Economist, Huw Pill, who pushed back on the idea that an August interest rate cut from the Bank was a done deal. Pill aired concerns over service sector inflation and wage growth still being uncomfortably high and as a result the chances of a cut in August are now a coin toss. This morning, we had better than expected growth figures for May with GDP expanding by 0.4% for the month, double what most had forecast. Some of the reason for the better than expected reading was pubs and restaurants benefitting from the good weather seen in the month. As ever, when the England football team go deep in a major football tournament it’s good for the services sector. July’s reading could be strong when figures are released later in the year after England progressed to the final of the European Championships last night. GBP/USD is currently up to 1.2865 with GBP/EUR up to around 1.1870.Key Movers
This week’s big event is due this afternoon with the latest US inflation reading due at lunchtime. The Consumer Price Index is expected to moderate from 3.3% to 3.1% y/y and as ever any major deviation from what’s predicted could cause some volatility in the markets. Three of the five readings for 2024 have come in hotter than expected and caused a lot of dollar strength, however the previous two came in as expected. Should it again print in line with market expectations then we could see the dollar slip as the unemployment rate is now at 4.1%, its highest since Nov 2021 and this will naturally help subdue inflation. The French election impasse is now background noise rather than a major area of market focus and there is data of note from the Eurozone for the rest of the week. EUR/USD trades around 1.0830, much unchanged since Monday.Expected Ranges
- GBP/USD: 1.2780 - 1.3000 ▲
- GBP/EUR: 1.1820 - 1.1910 ▲
- GBP/AUD: 1.8960 - 1.9130 ▲
- EUR/USD: 1.0760 - 1.0920 ▲