Pound Sterling has been range-bound against many of its major counterparts over the last two weeks. Most notably, GBPEUR which has traded within a cent from the high to low. Cable (GBPUSD) has traded within a 2-cent range and struggled to find support above the 1.25 handle.
The pound has strengthened in value due to the revised UK economic forecasts, however, it would seem the positivity has ended here for the pound and that new data will be needed to push the pound out of its current range.
This morning UK GDP figures confirmed that the economy was stagnant and did not grow month-month to February. The data confirms that the UK economy is not shrinking and therefore rights off the possibility of a technical recession but also shows a slow down in activity from last month where the economy grew by 0.4%. GDP could hinder the value of the pound given that markets were expecting a growth reading of 0.1%.
Weakly jobs data and monthly inflation (PPI) data will be released later today in the US which will be watched closely by the Federal Reserve. Yesterday, CPI showed another slowdown of inflation in the US which feeds into the narrative that the Fed’s current rate hike cycle could be over. This has lent support to the value of the euro and pound against the dollar. There could be further dollar weakness if another inflation reduction is confirmed.
Bank of England Chief economist Huw Pill will be speaking today, and markets will keep a close eye out for any comments on future monetary policy. The European Central Bank are behind the BoE in terms of interest rates. If the BoE stop raising rates and the ECB continue, then there could be downward pressure on the pound.
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