• The British currency is about to achieve a weekly gain
• A series of data showing the resilience of the British economy
• The possibility of a rate cut for the Bank of England decreases in September
The pound sterling rose in the European market on Friday against a basket of global currencies, extending its gains for the second consecutive day against the US dollar, hitting a two-week high, on the verge of achieving the best weekly gain in the last five weeks, thanks to a series of positive economic data that shows the resilience of the British economy.
The data has reduced the likelihood that the Bank of England will cut British interest rates in September, which is expected to narrow the interest rate gap between Britain and the United States.
Price Outlook • Exchange rate of the British pound today: The pound rose against the dollar by about 0.25% to ($ 1.2889), the highest since July 25, from the opening price of trading at ($ 1.2857), and recorded the lowest level today at ($ 1.2852).
The pound ended Thursday’s trading up 0.2% against the dollar, in the sixth gain in the last seven days, thanks to growth data in the British United Kingdom.
Weekly trading throughout this week’s trading, which officially ends when prices settle today, the pound sterling is up so far by more than 1.0% against the US dollar, on the verge of achieving the first weekly gain in the last five weeks, due to hopes of narrowing the interest rate gap between Britain and the United States.
Britain’s Office for National Statistics said in United Kingdom on Thursday that gross domestic product rose 0.6% during the second quarter, slightly below 0.7% growth in the first quarter, but in line with expectations.
That data shows that UK economic growth remains at the upper end of the range of typical results from the pre- and post-coronavirus periods.
Capital Economics analyst Ashley Webb said of the data: “On the sidelines, this may give the Bank of England some reassurance that the recent strength of activity will not prevent further declines in services inflation.
Thursday’s GDP data is the latest in a growing series of recent positive economic reports from United Kingdom.
British retail sales rose 0.5% in July, according to market expectations, up 0.5%, and revised the previous reading to a decline of 0.9% from a decline of 1.2%.
UK retail sales rise in July forecast
After positive growth during the second quarter, retail sales data confirms the continued resilience of the British economy at the beginning of the third quarter of this year, where retail sales are one of the most important indicators measuring consumer spending, which accounts for two-thirds of GDP.
Following the above data, interest rate swaps in United Kingdom showed a chance of around 40% of the Bank of England’s rate cut in September, and swaps also show a chance of around 50% of UK interest rate cuts in November.
According to CME Group’s FeedWatch: The pricing of the prospects of a US interest rate cut of about 50 basis points at the September meeting is currently stable at 22%, and the pricing of the prospects of a cut by about 25 basis points at 78%.
The current gap in interest rates between United Kingdom and the United States at 50 basis points in favor of US interest rates as the highest gap since May 2023, and in light of the above possibilities, the gap is expected to narrow to at least 25 basis points next September, which enhances investment opportunities in the British pound against the US dollar.
Bank of America Global Research strategists said the pound could still rise further and is expected to reach 1.35 against the US dollar by the end of the year.
• The strategists added: The pound sterling remains the best performing currency among the major G8 currencies so far, the fundamental/scientific positives continue to support the British currency.Technical viewThe British pound is trying to break out – today’s forecast 16-08-2024
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