The pound strengthened against the euro yesterday but was slightly weaker against the dollar. This sterling strength was largely to do with confirmation that the UK will be lifting all COVID-19 restrictions from next week, meaning that the economy should see a strong recovery.
After jumping to a two-week high against the dollar on Monday, sterling failed to retain its strength yesterday, partly due to dollar strength. This could also be due to the Bank of England’s Financial Stability Report, which said that stress testing shows the banking sector is well-equipped to deal with the fallout from the pandemic, but also highlights that some asset prices look stretched.
Inflation rate data for the UK came in at 2.5% annually, beating expectations of 2.2%. It also beat expectations on a monthly basis at 0.5% and core consumer prices increased 2.3% in June.
