Pound Sterling approaches annual highs on strong UK GDP, BoE rate-cut bets fade


content provided with permission by FXStreet


  • The
    Pound
    Sterling
    performs
    strongly
    against
    the
    US
    Dollar
    and
    other
    currencies
    on
    faster
    UK
    GDP
    growth
    and
    a
    decline
    in
    BoE
    rate-cut
    prospects.

  • The
    UK
    economy
    expanded
    at
    a
    faster
    pace
    of
    0.4%
    in
    May,
    beating
    an
    estimate
    of
    0.2%.

  • Investors
    await
    the
    US
    inflation
    data
    for
    fresh
    guidance
    on
    the
    Fed’s
    interest
    rates
    path.

The
Pound

Sterling

(GBP)
rallies
to
near
1.2870
and
approaches
the
year-to-date
high
against
the
US
Dollar
(USD)
in
Thursday’s
London
session.
The
GBP/USD
pair
strengthens
due
to
multiple
tailwinds,
such
as
weakness
in
the
US
Dollar
due
to
firm
speculation
that
the

Federal
Reserve

(Fed)
will
begin
reducing
interest
rates
in
September
and
an
upbeat

outlook

for
the
British
currency
amid
easing
Bank
of
England’s
(BoE)
early
rate
cut
bets
and
strong
United
Kingdom
(UK)
Gross
Domestic
Product
(GDP)
report
for
May.

The
US
Dollar
Index
(DXY),
which
tracks
the
Greenback’s
value
against
six
major
currencies,
falls
back
after
failing
to
extend
recovery
above
the
immediate
resistance
of
105.20.

The
Greenback
comes
under
pressure
as
Fed
Chair
Jerome
Powell
signalled
some
disinflation
progress
in
his
semi-annual
Congressional
testimony
comments.
Powell
refrained
from
announcing
a
victory
over
inflation
but
assured
that
policymakers
are
very
focused
on
the
path
toward price
stability.

In
Thursday’
session,
investors
will
keenly
focus
on
the

United
States

(US)

Consumer
Price
Index

(CPI)
for
June,
which
will
provide
cues
about
potential
market
expectations
for
Fed
rate
cuts
in
September.
Economists
expect
that
the
core
inflation,
which
excludes
volatile
food
and
energy
items,
grew
steadily
by
0.2%
and
3.4%
on
monthly
and
annual
basis,
respectively.
Annual
headline
inflation
is
estimated
to
have
decelerated
to
3.1%
from
May’s
reading
of
3.3%,
while
the
monthly
figure
is
expected
to
have
grown
by
0.1%
after
remaining
unchanged
previously.

Daily
digest
market
movers:
Pound
Sterling
outperforms
against
its
peers
on
multiple
tailwinds

  • The
    Pound
    Sterling
    outperforms
    its
    major
    peers
    on
    Thursday
    as
    the
    UK
    economy
    grew
    at
    a
    faster
    pace
    in
    May
    and
    the
    maintenance
    of
    a
    hawkish
    stance
    by
    BoE
    policymakers.
    UK’s
    Office
    for
    National
    Statistics
    (ONS)
    has
    reported
    that
    the
    economy
    expanded
    strongly
    by
    0.4%
    from
    the
    estimates
    of
    0.2%
    and
    a
    stagnant
    performance
    recorded
    in
    April.
  • The
    UK
    ONS
    also
    showed
    that
    monthly
    Industrial
    and
    Manufacturing
    Production
    grew
    in
    line
    with
    expectations
    after
    contracting
    in
    April,
    while
    annual
    figures
    missed
    estimates.
    Monthly
    Industrial
    and
    Manufacturing
    Production
    rose
    by
    0.2%
    and
    0.4%,
    respectively.
    Annually,
    Industrial
    and
    Manufacturing
    Production
    grew
    at
    a
    slower
    pace
    of
    0.4%
    and
    0.6%,
    respectively.
    The
    factory
    data
    has
    returned
    to
    a
    positive
    trajectory
    after
    contracting
    at
    a
    stronger
    pace
    in
    April,
    suggesting
    a
    strong
    recovery
    in
    the
    domestic
    and
    overall
    demand
    for
    factory
    products.
  • Meanwhile,
    Bank
    of
    England
    (BoE)
    policymakers
    have
    pushed
    back
    expectations
    of
    rate
    cuts
    in
    August.
    On
    Wednesday,
    BoE
    policymaker
    Catherine
    Mann
    warned
    that
    the
    decline
    in
    annual
    headline
    inflation
    to
    the
    2%
    target
    was
    merely
    a
    “touch
    and
    go”.
    Mann
    added
    that
    price
    pressures
    could
    rise
    again
    and
    remain above
    the
    required
    rate
    for
    the
    rest
    of
    the
    year.
    She
    indicated
    that
    her
    stance
    would
    remain
    hawkish
    until
    she
    sees
    a
    sustained
    decline
    in
    service
    inflation
    and
    wage
    growth.
  • This
    week,
    BoE
    policymaker
    Jonathan
    Haskel
    also
    maintained
    hawkish
    guidance
    on
    interest
    rates
    due
    to
    sticky
    wage
    growth.
    Haskel
    said: “I
    would
    rather
    hold
    rates
    until
    there
    is
    more
    certainty
    that
    underlying
    inflationary
    pressures
    have
    subsided
    sustainably”,
    Reuters
    reported.

Pound
Sterling
Price
Today:

British
Pound
PRICE
Today

The
table
below
shows
the
percentage
change
of
British
Pound
(GBP)
against
listed
major
currencies
today.
British
Pound
was
the
strongest
against
the
Canadian
Dollar.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   -0.09% -0.15% -0.06% 0.10% -0.13% -0.12% -0.09%
EUR 0.09%   -0.06% 0.04% 0.20% -0.03% -0.02% 0.00%
GBP 0.15% 0.06%   0.08% 0.26% 0.03% 0.03% 0.07%
JPY 0.06% -0.04% -0.08%   0.16% -0.07% -0.10% -0.04%
CAD -0.10% -0.20% -0.26% -0.16%   -0.25% -0.23% -0.20%
AUD 0.13% 0.03% -0.03% 0.07% 0.25%   0.00% 0.05%
NZD 0.12% 0.02% -0.03% 0.10% 0.23% -0.00%   0.04%
CHF 0.09% -0.00% -0.07% 0.04% 0.20% -0.05% -0.04%  

The
heat
map
shows
percentage
changes
of
major
currencies
against
each
other.
The
base
currency
is
picked
from
the
left
column,
while
the
quote
currency
is
picked
from
the
top
row.
For
example,
if
you
pick
the
British
Pound
from
the
left
column
and
move
along
the
horizontal
line
to
the
US
Dollar,
the
percentage
change
displayed
in
the
box
will
represent
GBP
(base)/USD
(quote).

Technical
Analysis:
Pound
Sterling
sets
for
inverted
H&S
breakout


The
Pound
Sterling
approaches
a
fresh
annual
high
against
the
US
Dollar
near
1.2870.
The
GBP/USD
pair
is
expected
to
extend
its
upside
as
it
is
on
the
verge
of
an
inverted
Head
and
Shoulder
(H&S)
breakout.
The
neckline
of
the
above-mentioned
chart
pattern
is
plotted
near
1.2850,
and
a
breakout
of
the
H&S
formation
results
in
a
bullish
reversal.

Advancing
20-day
Exponential
Moving
Average
(EMA)
near
1.2747 suggests
that
the
near-term
trend
is
bullish.

The
14-day
Relative
Strength
Index
(RSI)
established
into
the
bullish
range
of
60.00-80.00,
indicating
that
the
momentum
has
leaned
to
the
upside.

Economic
Indicator

Consumer
Price
Index
ex
Food
&
Energy
(YoY)

Inflationary
or
deflationary
tendencies
are
measured
by
periodically
summing
the
prices
of
a
basket
of
representative
goods
and
services
and
presenting
the
data
as
the
Consumer
Price
Index
(CPI).
CPI
data
is
compiled
on
a
monthly
basis
and
released
by
the

US
Department
of
Labor
Statistics
.
The
YoY
reading
compares
the
prices
of
goods
in
the
reference
month
to
the
same
month
a
year
earlier.
The
CPI
Ex
Food
&
Energy
excludes
the
so-called
more
volatile
food
and
energy
components
to
give
a
more
accurate
measurement
of
price
pressures.
Generally
speaking,
a
high
reading
is
bullish
for
the
US
Dollar
(USD),
while
a
low
reading
is
seen
as
bearish.



Read
more.