Sterling Hits 2-Year High; Euro Strengthens vs Dollar

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

Sterling

Sterling climbed to a more than two-year high against the dollar on Friday, on recent signs of strength in the UK economy and dovish comments from Federal Reserve Chair Jerome Powell, which sent the dollar sliding against multiple global currencies.

GBP jumped 0.7% to 1.322 against USD, touching its highest since late March 2022, surpassing a previous 13-month high of 1.314.

Sterling has been among the top performing major currencies this year, picking up steam in the last two months after a slew of stronger than expected economic data suggested the BoE need not be in a rush to cut interest rates.

The latest numbers showed British consumer confidence held at an almost three-year high in August.

A survey on Thursday showed UK business activity accelerated in August and cost pressures eased to their lowest level in over three years.

Euro

The Euro gained, once again, against the dollar last week and ended the week trading at USD per EUR 1.18, crossing 1.12 for the first time this year as news out of the US knocked the valuation of the dollar.

Underlying data showed an increase in inflation to 2.6% in July with a strong services PMI. Manufacturing, however, showed further contraction as it has been doing for the past 24 months, which will be of concern to EU policymakers.

In the week ahead we have a key preliminary August inflation reading where inflation is expected to have dipped to 2.3%.