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Weekly roundup: Pound soars ahead of UK GDP

currency-newsWeekly roundup: Pound soars ahead of UK GDP
The pound surged over 1% against the euro and US dollar after the Scottish Nationalist Party (SNP) failed to gain an outright majority and the risk of another independence referendum lessened.
With the risk of renewed political tensions easing, the appeal of the pound improved, especially as markets began to prepare for the next phase of easing national lockdown conditions.
Confidence in the underlying health of the UK economy also improved in the wake of an upwardly revised finalised April services PMI.
As the sector demonstrated another strong growth increase on the month, this helped to support the odds of a positive second quarter GDP reading.
However, Sterling had dipped sharply following the Bank of England’s latest interest rate decision as the central bank’s decision to only begin slowing its bond buying programme disappointed investors, who expected more tapering.
Looking ahead, the appeal of the pound could weaken on Wednesday with the release of the first quarter GDP report.
Forecasts point towards the quarterly growth rate slumping to -1.6% in the first three months of 2021, highlighting the ongoing impact of the Covid-19 pandemic.
On the other hand, if March’s monthly GDP figure betters expectations and shows a less severe contraction, this could help to keep something of a floor under GBP exchange rates this week.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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