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Sterling makes an end of week drive

Daily Currency Update

Having started the week on the back foot versus the US dollar, Sterling has made a late run against both the US dollar and the euro. With the currency being driven by news in other parts of the world, it has been predominantly impacted by a renewed global risk appetite picture, with stock markets in the US ending the week well, the US dollar weakening off, and risk-based currencies such as the pound benefitting somewhat. Investors tend to move towards safe-haven assets such as the US dollar during times of uncertainty.


Key Movers

Weak US data has also helped to drive the US dollar lower. Advanced GDP came in at -0.9% versus an expectation of +0.4%, with the US economy unexpectedly contracting in the second quarter, with consumer spending growing at its slowest pace in 2 years and business spending declining.

The financial markets have been long fearful of a potential US recession, however Jerome Powell’s comments during the US Federal Reserve’s interest rate decision on Wednesday, suggested that he wasn't so worried about recessionary fears, and instead more concerned about controlling inflation in the short term.

With the big news this week coming from the Fed's interest rate hike of 0.75% on Wednesday, recessionary fears now leave the market pondering whether Jerome Powell may take the foot off the pedal when it comes to interest rate hikes, which has done little to support the US dollar in the back end of this week.

Expected Ranges

  • GBP/USD: 1.2080 - 1.2215 ▲
  • GBP/EUR: 1.1845 - 1.1940 ▲
  • GBP/AUD: 1.7270 - 1.7510 ▼
  • EUR/USD: 1.0175 - 1.0265 ▲