The British pound has experienced a surge, reaching its highest level in over a week and approaching a seven-month high, fueled by positive sentiment surrounding upcoming economic data releases and a significant political agreement with the European Union. Simultaneously, the US dollar weakened, contributing to the pound’s upward trajectory.
- The British pound surpassed $1.336, reaching its highest point in over a week.
- It’s nearing the seven-month peak of $1.34 reached in April.
- Optimism is driven by anticipated key UK economic data and a political breakthrough with the EU.
- The UK and EU reached an agreement to reset post-Brexit relations, including cooperation on energy, defense, and reciprocal fishing rights through 2038.
- Investors are awaiting Thursday’s flash PMI figures, which are expected to show a smaller contraction in manufacturing and a milder decline in services.
- April inflation is forecast to rise to 3.3%, the highest in 14 months, while core CPI may hit 3.6%.
- Retail sales are projected to increase by 0.4%, continuing a four-month streak of gains.
- The US dollar weakened after Moody’s downgraded the US government’s credit rating.
The currency’s recent performance suggests a positive outlook, boosted by both internal and external factors. Stronger than expected economic data, coupled with a resolution of political uncertainty, could further strengthen the asset’s position. The weakening of a major counter currency provides additional support, indicating potential for continued appreciation if the positive trends persist.