The British pound continues to advance slightly against the US dollar for the third day in a row, by 0.03%, while the euro is still located near its lowest levels against the pound since August of the year 2022 at 0.84308.
Today’s pound gains come despite the weaker-than-expected performance of most sectors of the UK economy, which comes in anticipation of the results of the Federal Open Market Committee (FOMC) meeting in the US and the CPI reading for May.
The construction, manufacturing, and industrial sectors recorded a faster-than-expected contraction last April, while services grew for the fourth month in a row.
This ultimately led to the GDP remaining unchanged in April.
With this weak economic performance, today’s tightening speech from the Fed and monetary policymakers adjusting the Summary of Economic Projections in a way that reinforces the hypothesis of higher-for-longer could erase the pound’s recent gains and restore the bearish trend.
Market expectations have declined about the possibility of the Fed cutting interest rates in September and November with the sudden rise in employment in May. On the other hand, the markets are still holding on to the possibility of the Bank of England cutting rates next August, even with the stickiness of the high wage growth that we witnessed yesterday.
In today’s numbers, as expected, the GDP did not grow last April on a monthly basis, but grew by 0.6% on an annual basis. While the construction, industrial, and manufacturing sectors contracted by 1.4%, 0.9%, and 1.4%, respectively, on a monthly basis, which exceeded expectations, while services grew by 0.2% in the same period and grew by 0.9% in the three months ending in April as well and beating expectations.
As for the United States, Consumer Price Index inflation in the United States is expected to hold at 3.4% on an annual basis, slowing to 0.1% on a monthly basis from 0.3%.
