Sterling edges up to highest level since July on rate outlook
Data on Tuesday showed U.S. consumer prices rose by an annual 2.7% in July, compared with expectations for 2.8%.
An underlying measure of inflation that excludes food and energy rose more quickly than forecast, up 3.1% year-on-year, versus expectations for a rate of 3%, reflecting the increased cost of some goods and services, as tariffs started to kick in.
Sterling , which has gained 8.3% this year against the dollar, was last up 0.5% at $1.3569, having hit a session peak of $1.3578, the most since July 25.
The pound has risen by nearly 2.4% in August against the dollar, which, if maintained, would be the largest monthly increase since April.
Money markets show traders fully expect the Federal Reserve to lower borrowing costs in September and see a strong possibility of further easing by year-end, following the CPI data. Last week's employment report showed the U.S. economy created far fewer jobs than expected between May and July, putting a September rate cut firmly on the table.
In contrast, UK labour data on Tuesday showed weakness in hiring but persistent wage growth, a positive for British consumers but a headache for the Bank of England, which is juggling the risks of a slowing economy and stubborn inflation.
The BoE last week cut rates, but signalled concern over the outlook for UK inflation.
Traders now think the next BoE cut might only come in November. If both scenarios play out, UK rates would end the year roughly on a par with U.S. ones, around 3.7-3.8%, which, in theory, removes some of the dollar's competitive advantage against sterling.
Next up for UK markets is gross domestic product data on Thursday, which economists expect to show the UK economy expanded by 0.1% in the three months to June, compared with an expansion of 0.7% in the first quarter, based on data from the Office for National Statistics.
"Sterling's resilience underscores how sensitive the currency is to rate expectations. Tomorrow's flash Q2 GDP report is the next hurdle; we expect a slight uptick in quarterly growth, but any disappointment could prompt a reversal in recent gains," analysts at Monex said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Mail
12 minutes ago
- Daily Mail
Aviva took six months to transfer my pension - and it cost me £7,000: SALLY SORTS IT
I had three pensions with Aviva worth £140,607 that I wanted to transfer to investment firm Vanguard. I made the request on November 27 last year, as I wanted the money in my Vanguard account in good time by April 5, 2025, so I could have some income from it in that tax year. However, this was not possible because Aviva delayed transferring them. Please can you help? G.W., Maidstone, Kent. Sally Hamilton replies: When you asked to transfer your pensions from Aviva, Vanguard suggested it would take around four to eight weeks. This gave you plenty of breathing space – or so you thought – to get the transaction done, so you could take an income from the transferred pot before the tax year ended. But it wasn't until April 2 – with just three days left of the last tax year – that Aviva finally told you by letter that the payment had been issued, including £2,638 in late interest. You checked your Aviva account online and found it was indeed closed, with no funds remaining. But to your frustration it had not reached Vanguard. The delays continued. Two weeks (and nine chasing phone calls to Aviva customer service) later, Aviva revealed that the payment couldn't be made as the bank had not authorised it. It gave no explanation but told you not to worry as it would go through in a couple of days. It didn't. Your blood pressure climbed when staff said it would take four weeks to investigate your complaint. After four weeks your frustration was off the charts, when they told you they were still looking into it and asked you to allow them another four weeks. All this time you had neither access to your pension – and nor was it invested. Every time you tried to speak to someone with authority, you ended going round in circles, with calls either not returned – or missed – and when you called back, the manager who had left you a message wasn't known to the call handler. It was time for me to give Aviva a serious prod. Within a few days Aviva finally got a grip on your case and your money landed with Vanguard a few days later. Details were not given of what exactly went wrong except the company admitted a blunder. A spokesman says: 'We are extremely sorry for the delay in transferring Mr W's pensions, and the distress this has caused him. 'This was due to an error on our part. I can confirm that the full payment has now been transferred and received by Vanguard.' Last week, Aviva finally completed a loss assessment after liaising with Vanguard. This took several weeks of to-ing and fro-ing between it and Vanguard. In the end, taking into account late and lost interest, plus potential tax liability faced by you for taking the money in the current tax year rather than last year as planned, plus £750 as an apology, you have received total recompense of £8,096. Write to Sally Hamilton at Sally Sorts It, Money Mail, Northcliffe House, 9 Derry Street, London W8 5TT or email sally@ — include phone number, address and a note addressed to the offending organisation giving them permission to talk to Sally Hamilton. Please do not send original documents as we cannot take responsibility for them. No legal responsibility can be accepted by the Daily Mail for answers given.
BBC News
13 minutes ago
- BBC News
Agreement reached over Morecambe takeover
Morecambe's owners and prospective buyers Panjab Warriors have reached an agreement in principle to transfer the majority shareholding in the announcement comes after the two parties agreed to a mediation session this week after an initial session failed to take place the week Warriors previously had their takeover approved by the EFL in June following the club's relegation from League Two, but a chaotic summer has since followed, with the Shrimps being suspended from the National League in the midst of an ongoing impasse."This agreement reflects the willingness of both sides to compromise in the best interests of Morecambe FC, its supporters, and the wider community. It paves the way for continued stability and a positive future both on and off the pitch," the two parties said in a joint statement., external"Final legal documentation will now be prepared, with immediate steps being taken to inform key stakeholders, including the National League and the club's management team."Both Panjab Warriors and Bond Group would like to thank all parties involved for their patience and support during this process, and we look forward to a new chapter in the club's history." Panjab Warriors, who have been trying to take over the beleaguered club for over a year, were joined in a separate bid by businessman Jonny Cato in trying to mount a closed operations in late July shortly after their suspension from the National League, with a takeover still to take culture secretary Lisa Nandy called on owner Jason Whittingham to sell the club, with the Shrimps' plight coinciding with the Football Governance Bill passing into is unclear from Thursday's statement when Panjab Warriors' takeover will be finalised, however."We would like to thank all of the staff at the club for their forbearance and can only apologise for the stress this has caused," added the Bond Group."In particular I would like to thank Rob, Derek, Oliver and Martin for their continued professional conduct and support throughout this process and also their support for the staff and the community."I would hope that the Shrimps fans can now give their full support to the club and its journey ahead."
The Guardian
13 minutes ago
- The Guardian
British Gas owner buys £1.5bn gas terminal in big bet on fossil fuel reliance
The owner of British Gas has placed a £1.5bn bet on the UK's future reliance on fossil fuel imports after striking a deal to buy Europe's biggest gas import terminal. Centrica plans to partner with a US private equity firm to acquire the Isle of Grain terminal in Kent which can import 15m tonnes of liquefied natural gas a year, even after Britain's gas demand fell last year to its lowest level since the early 1990s. The pair will buy the gas terminal from the FTSE 100 energy company National Grid, which in recent years has sold off its interests in Britain's gas infrastructure in favour of investing in electricity grids. Chris O'Shea, the chief executive of Centrica, said the 'strategic asset' would continue to support the UK's energy security 'for many decades to come' during the transition to net zero. The deal comes after Centrica's £20bn deal with Norway's state energy company earlier this summer to buy enough gas to meet nearly 10% of the UK's needs for the next decade. Under the agreement, Centrica will buy around 5bn cubic meters of gas from Equinor – enough to supply 5m UK homes – every year from this winter until 2035 at the prevailing market rate. O'Shea has also called on the government to support a £2bn project to upgrade its Rough gas storage facility, the largest gas store in Britain, as a 'very valuable insurance policy' for when the sun doesn't shine and the wind doesn't blow. Britain's gas imports tumbled by 47% last year to lows not recorded since before the pandemic, despite falling homegrown production of North Sea oil and gas, as the overall demand for gas slumped to its lowest level since 1992. British households are expected to continue using gas for heating and cooking for decades as efforts to replace gas boilers with electric heat pumps has struggled to meet the government's goal of installing 600,000 a year. But the electricity sector is expected to dramatically cut its reliance on gas power plants in the years ahead. The UK has already significantly reduced its use of gas to generate electricity owing to a rise in electricity imports from Europe and lower energy demand overall. Wind power generated more electricity than gas in 2024, contributing 30% of the UK's power needs against just over 26% from gas plants as low carbon generation hit a record high. By the end of the decade, the government hopes gas plants will be used as a last resort option in the UK's electricity market and generate just 5% of the UK's power under its plans to create a virtually carbon-free power system. Last month, Centrica struck a deal to take a 15% stake in the planned Sizewell C nuclear power plant on the Suffolk coast which is expected to begin operating in the mid to late 2030s.
