Euro falls after ECB hikes rates 0.25%

Daily Currency Update

GBP/USD has dropped over two cents in the past 24 hours as a slew of good US data raised the possibility that the US Federal Reserve may have to enact another interest rate hike later this year or at least hold rates at their current level of 5.5% for longer. Yesterday saw the first reading of US GDP for April-June with an annualized rate of growth of 2.4% shown, above expectations of 1.8%. The previous quarter's number was also revised higher to 2% from 1.1% highlighting the resilience of the US economy despite its enduring decades of high inflation over the past couple of years. Better-than-expected durable goods orders, unemployment claims, and trade balance numbers were released at the same time and the dollar rallied as a result. GBP/USD which was close to 1.30 this time yesterday is now under 1.28. Later today we have US Personal Consumption Expenditure figures due at lunchtime. Looking further ahead Thursday 3rd August sees the Bank of England interest rate decision, which is expected to see Governor, Andrew Bailey unveil another 0.25% rise in the cost of borrowing. Clues as to how many more rises we are likely to see thereafter will be the main area of interest with markets paring back their expectations of how high the Bank rate may peak after UK inflation fell further than expected earlier this month. GBP/USD is at 1.2780 with GBP/EUR at 1.1665.