Pound continues to rally
Daily Currency Update
GBP - British Pound
The pound continues to strengthen against its major currency peers, as GBP/USD and GBP/EUR near monthly highs. Vaccination rates are continuing to climb in the UK, and with the increased likelihood of an interest rate hike, the pound is a more attractive prospect than it was a few weeks ago. At the G30 International Banking Seminar on Sunday, Bank of England Governor, Andrew Bailey, cautioned that the Bank ‘will have to act’ to counter rising inflation. A rate hike before the end of the year could lead to more confidence in the UK economy and the pound.
Key Movers
The US dollar seems to be fighting back after struggling for a few days. Weak economic data out of China tends to knock demand for riskier currencies and can increase supply for safe haven currencies such as the US dollar. Quarterly GDP figures came in at 4.9% when they were expected at 5%, which isn’t a huge miss but combined with Industrial Production figures missing target, is enough to give the markets jitters.This has also jolted the euro. The global increase in inflation keeps adding negative pressure, making it one of the worst G10 performers over the last weeks. The surging energy prices have pushed consumer inflation to 13-year highs in the euro area and are threatening to derail the post-pandemic recovery.
Expected Ranges
- GBP/USD: 1.3730 - 1.3925 ▲
- GBP/EUR: 1.1790 - 1.1880 ▲
- GBP/AUD: 1.8380 - 1.8540 ▼