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Sterling had another strong day yesterday but its strong position now comes up against economic data.
Sterling fell from two-year highs against the US dollar on Wednesday but gained strength against the euro as investors focused on the differing approaches to monetary policy between the Bank of England and the Federal Reserve.
The pound started the day at its highest in around a month. GBP/USD edged lower yesterday but remains over 1% higher on the week. It’s still not too late to speak to your account manager about a forward contract – give them a call today to discuss strategies on 020 3918 7255.
The Department of Work and Pensions (DWP) in the UK has been accused of deliberately making pension credit “inaccessible” to retirees with a 22-page form made up of 243 questions, including “Does your partner agree to your application?” This comes following chancellor Rachel Reeves’ campaign that aims to encourage 880,000 more pensions to claim the benefit.
Thames Water proposed raising average yearly water bills to £666.50 by 2030 to pay for its turnaround. As the average annual bill from 2023 to 2024 was £433, this suggests an increase of £200 per year.
Nvidia’s earnings report was highly anticipated, especially by US stocks on Wednesday, which lost 0.4% before the release. Despite its revenue more than doubling in the last quarter to $30bn, markets were unimpressed that it had undershot some of its more ambitious forecasts. Nvidia shares came under pressure in the aftermath, falling as much as 8%.
New figures showed that economic growth in Scotland matched the UK in the second quarter of the year. The Scottish economy is estimated to be 0.9% larger than it was in April to June 2023.
This afternoon, the spotlight shines on Germany as investors await the latest inflation rate, while GDP figures for the US are expected after lunchtime in the UK. Markets forecast 2.8% of economic growth for the US in the second quarter of 2024.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 3918 7255 to get started.
GBP: US GDP next in spotlight
Sterling’s rapid ascent against the US dollar faces a key test today with the second estimate for US GDP data in Q2. Any change to the initial estimate of 2.8% growth could have a major impact on GBP/USD.
GBP/USD: the past year
EUR: Almost 3% gains in August
Amid conversations of a weaker US dollar and sterling gains, the euro has quietly also made significant gains this month, adding just under 3% since late July. However, this afternoon’s inflation figures for the euro area could influence its current position.
GBP/EUR: the past year
USD: Rate cuts on the horizon
Investors are unanimously betting that the Federal Reserve will begin cutting interest rates in September. Market consensus has swung recently towards a 0.5% cut, although it would not be a major surprise for the Fed to tread a more cautious path.
EUR/USD: the past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 7898 0500 or your Private Client Account Manager on 020 7898 0541.
