GBP Strengthens, ECB Eyes Rate Cuts Amid Inflation Variances

GBP Strengthens on Economic Growth and Inflation Targets; ECB Eyes Rate Cuts Amid Eurozone Inflation Variances

Published on 3 July 2024

, 1 minute read

Sterling

Sterling traded at 1.264 against USD last week, a 0.2% appreciation. The British economy grew 0.7% in Q1, slightly above initial estimates of 0.6% and the strongest growth in over two years. On the price-level front, headline inflation dropped to the Bank of England's 2% target. The BoE kept interest rates unchanged, but fuelled hopes for an August rate cut based on policymakers' comments.

Euro

The Euro gained 0.3% against the dollar last week to trade at 1.07 on Friday. Preliminary data showed France's annual harmonised inflation rate slowed to 2.5%, as expected, while Spain's rate decreased to 3.5%, slightly above expectations. In contrast, Italy's inflation is expected to accelerate slightly. Earlier this week, ECB Governing Council member Olli Rehn suggested the potential for two more interest rate cuts this year.

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