Sterling dips after BoE rate cut while Euro climbs on strong GDP growth

Here’s this week’s overview of the Euro and Sterling:

Sterling

Sterling traded at 1.279 against USD last week, a 0.4% depreciation. The BoE opted to cut interest rates by 25bp on Thursday in a razor tight decision with 5 MPC members opting to cut with 4 to hold. The decision to cut was largely vindicated on Friday with the US payrolls report sparking fears of a recession. Sterling did pare most of its losses but ended the week down as markets had only priced in a 60% chance of a cut in the meeting. With the Dollar on the back foot to start the week, Sterling could be well set to recoup last week’s losses.

Euro

The Euro was one of the major gainers last week and ended the week trading to 1.091 versus the US Dollar, close to a 5-month high. Unexpectedly strong GDP growth in the second quarter helped push the common currency higher against a weak Dollar. With the ECB having already cut rates and Fed Futures being revised down, the Euro potentially has more upside in the coming weeks if data holds.