Despite dropping ahead of the European Central Bank’s (ECB’s) interest rate decision, the pound ended Thursday largely unchanged against the euro. It is around 0.75% up on the start of the week and slightly ahead of this time last month.
Against the US dollar, sterling lost our heavily yesterday following strong GDP figures from the US which revealed their economy expanded an annualised 2.4% in the second quarter of 2023, accelerating from the previous quarter’s 2% when it had been expected to moderate back to 1.8%. This was largely fuelled by a surge in business investment and consumer spending.
The ECB raised interest rates by 25 basis points to 4.25% in July, marking their ninth consecutive rate hike since last June and the highest borrowing costs for 22 years.
We have heard this morning, on the other hand, that the Bank of Japan is holding rates at 0.1%.
US stocks were all up yesterday as investors absorbed fresh GDP data and corporate earnings figures. The Dow Jones added a whopping 100 points, increasing for a record-breaking 14th consecutive session.
As for economic data, next week economists will hear eurozone inflation rates, US employment data and Germany’s balance of trade. However, the spotlight remains on the Bank of England, which is forecast to raise interest rates by 25-basis points to 5.25% on Wednesday.
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