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Pound hovers below 1.3550 after UK growth beat and softer US inflation
Sterling’s push above 1.3500 follows a June UK GDP upside surprise, but industrial production and manufacturing fell, while US inflation data weighed on the dollar.
The British pound traded just under 1.3500 on Thursday, moving within a session range of barely 40 pips as the day’s data split the pair’s direction, according to FXStreet. On the UK side, June Monthly GDP rose 0.3% versus expectations for no growth, and second-quarter year-on-year growth came in at 1.2% versus 1.1% expected. FXStreet noted that services drove the increase, with the detail pointing to a temporary Gulf ceasefire, the start of the World Cup and favorable weather.
The currency support was tempered by other parts of the release. FXStreet said industrial production fell 0.2% month over month in June, and manufacturing output dropped 0.5% month over month versus a 0.2% decline expected, adding that the July conditions driving services do not necessarily repeat.
FXStreet also attributed part of the exchange rate shift to a softer US inflation print, with the pound moving modestly higher since the start of August and reclaiming the 50-day and 200-day exponential moving average band near 1.3400. In FXStreet’s view, the durability of the UK growth surprise is questionable because the ceasefire input ended in July, while rate futures were pricing a September 16 hold at 65.2%, leaving the probability of a hike at 34.8%.