Sterling gains fresh strength against the US dollar amidst Britain’s economic growth this morning. The latest GDP figures show Britain’s economy has expanded by 0.2%, with services being the main contributor to GDP growth. The increase was a little less than expected however the UK’s economy is now 1.1% above its February 2020 level (before the coronavirus pandemic).
Against the euro, sterling is a little weaker this morning following last week’s lows. Foreign investors interpreted the BoE’s Andrew Bailey’s response to Truss’ £150bn energy plan as dovish, which triggered sterling to reach historic lows against both the euro and the dollar. Truss suggested this plan would curb inflation as well as soothe household energy costs but analysts have said this government spending and borrowing could be even more inflationary for Britain’s economy.
In the eurozone, central banks are expected to take cautious steps following its inflation hike last week. At lunch, Isabel Schnabel, member of the ECB’s executive board will speak.
This week is a big data week for the US, key data to watch out for will be core inflation YoY and Inflation rate YoY which will both be released tomorrow. The annual core inflation rate is predicted to remain unchanged again at 5.9%, however inflation is expected to take a 0.4% fall from 8.5% to 8.1% in upcoming data.
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