The pound sterling rose in the European market on Thursday against a basket of global currencies, to maintain its gains for the sixth consecutive day against the US dollar, about to touch the highest level in 13 months recorded earlier in trading on Wednesday, especially after exceeding the psychological barrier at $ 1.3, thanks to a series of positive economic data that shows the extent of resilience enjoyed by 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 reduce the interest rate gap between Britain and the United States.
In order to reassess this resilience, traders are awaiting the release of data on the main industrial and service sectors in United Kingdom during the month of August.
Price outlook • The exchange rate of the British pound today: The pound rose against the dollar by more than 0.1% to (1.3108 dollars), from the opening price of trading at (1.3093 dollars), and recorded the lowest level today at (1.3081 dollars).
– The pound ended Wednesday’s trading up 0.45% against the dollar, in the fifth consecutive daily gain, and recorded a 13-month high of $1.3120, due to the ongoing sell-off of the US currency against most major and secondary currencies.
– 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.
GDP data is the latest in a growing series of recent positive economic reports from United Kingdom.
– British retail sales recorded a rise according to expectations in July, confirming the continued resilience enjoyed by the British economy at the beginning of the third quarter of this year, where retail sales are one of the most important indicators to measure consumer spending, which accounts for two-thirds of GDP.
– In order to further confirm the resilience of the British economy, investors await later today, the release of data on the main industrial and service sectors during the month of August.
British Interest:
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.
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American Interest:
According to CME Group’s FeedWatch: pricing the odds of a 50 basis point cut in US interest rates at the September meeting are currently stable at 35%, and the pricing of the odds of a cut by about 25 basis points at 65%.
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 shrink to at least 25 basis points next September, which enhances investment opportunities in the British pound against the US dollar.
Forecast for the performance of the pound:
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 remains the best performing currency among the major G8 currencies to date, and the fundamental/scientific positives continue to support the British currency.”
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