Sterling remains in the balance – will growth figures strengthen the pound?
Sterling exchange rates have remained relativity balanced this week. The pound was boosted against the dollar last week following a ‘dovish’ hike from the Federal Reserve. The Bank of England also raised rates which helped support the pound against the euro. Following the latest release of services and manufacturing PMI data, GBPEUR has been range bound between 1.1340 – 1.14. Cable (GBPUSD) has been a little more positive for sterling sellers reaching highs of 1.2360 but remaining within the 1.22 – 1.2360 range.
The economic calendar is busier later today and tomorrow with several key events to look out for. Eurozone consumer confidence could cause volatility for pairings involving the single currency. EURUSD is the most traded currency pair globally meaning significant shifts in value can affect other pairings. US growth (GDP) data could provide support for the dollars value if the reading is higher than expected.
For the UK and GBPEUR, tomorrow could prove important for exchange rates moving forward. Quarterly GDP figures will confirm whether the UK’s economy grew or shrank. A negative reading here would surprise markets and weaken the value of the pound. A positive reading could push sterling higher and out of its current range.
Eurozone inflation data will be watched closely by the European Central Bank. The ECB like many other central banks have been raising interest rates in attempt to bring inflation under control. They raised rates by 50-basis points this month which lent support to the euros value. If inflation is falling, the ECB will be under less pressure to raise rates again. If it is elevated, then they will likely continue their current rate hike cycle. A lower reading could be seen as negative for the euros value and therefore provide a boost for GBPEUR.
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