Pound at 10-week low against dollar after US-EU trade deal
The pound was last a touch higher against the dollar at $1.33570, but had earlier fallen to $1.3316, its lowest level since May 23.
The dollar was broadly stronger on Tuesday, continuing a rally after Sunday's news that the United States and the EU struck a framework trade pact, the latest in a flurry of deals to avert a global trade war. Investors are also looking ahead to a U.S. Federal Reserve and Bank of Japan meeting this week.
The euro slid 0.1% against the pound to 86.71 pence, coming off a two-year high of 87.44 hit on Monday when the euro fell 0.78% against sterling , its largest one-day drop since mid-April.
"That reflected positioning," said Chris Turner, global head of markets at ING, of Monday's fall in euro/sterling.
Money markets show that traders believe the European Central Bank is probably closer to the end of its rate-cutting cycle than the Bank of England, which would favour the euro over sterling. In addition, the fiscal outlook in the euro zone appears healthier than that of the UK, where the government may be forced to raise taxes or borrow more this year.
"Those two opposing stories have made euro/sterling quite a popular trade, and part of that unwound in a bit of hurry yesterday," said Turner.
The fact that Britain secured a deal for a 10% tariff compared with the EU's deal for a 15% rate could be giving sterling a boost against the euro, he said.
A survey on Tuesday showed British shop prices rose by the most in more than a year in the 12 months to July and food prices grew more strongly, adding to other inflation signals and underscores the BoE's interest rate dilemma.
Last week soft British retail sales and business activity data weighed on the pound.
Elsewhere, data showed British lenders approved more mortgages than expected last month, adding to signs that the housing market has recovered from a dip after the expiry of a tax break for home buyers, and consumers also upped their borrowing, data showed on Tuesday.
"Overall, today's money and credit data give a tentative sign of consumer spending picking up a little, and of business sentiment improving, however, growth will still be weak in Q2. For now, the MPC is likely to focus on that weaker growth outlook, meaning a rate cut in August is the odds-on bet," said Thomas Pugh, chief economist at RSM UK.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
BBC News
20 minutes ago
- BBC News
Plans submitted for Rother battery storage facility on farmland
A renewable energy company has put forward plans to build a battery storage facility in Catsfield, East an application to Rother District Council, Elgin Energy EsCo Ltd asked for planning permission to erect a facility containing a Battery Energy Storage System (BESS) on land to the south of the would take energy from National Grid at times of excess power generation, store it and then feed it back into the system at times of high need, reducing reliance on natural plans include the creation of wetland, native hedgerow and tree planting, rural tree planting, reports the Local Democracy Reporting Service. A statement submitted with the application said: "National policy and guidance are strongly supportive of renewable energy as a means of meeting our increasing energy demands, tackling climate change, and transitioning to a prosperous and low-carbon sustainable economy."BESS facilities are recognised as being not just necessary, but central to meeting an urgent need in a declared climate emergency."Energy storage plays a crucial part in the drive to net-zero and provides the capability to store renewable energy for release instantaneously at times of demand, helping to stabilise energy security. It also guards against the prospect of renewable energy being 'lost' to the grid through network constraints at the time of generation." The application proposes to build the facility on land currently part of the Catsfield Christmas Tree Farm, although that business would be able to application also notes how the facility is in close proximity to the National Grid's Ninfield substation and would be well-screened by would be expected to have a total power output of up to 99.9 megawatts (MW), although battery technology still evolving the developer is unable to yet say precisely how many battery units would be on the site and what exact form they would units would be similar to shipping containers and include monitoring equipment, sprinklers and built-in explosion protection features.
The Guardian
20 minutes ago
- The Guardian
YouTube to gauge US users' ages with AI after UK and Australia add age checks
YouTube announced on Tuesday that it will begin to use artificial intelligence to estimate the ages of users in the US, in order to show them age-appropriate content. The rollout of the new feature comes one day after Australia's government announced it would ban children under 16 from using YouTube and less than a week after the UK implemented sweeping age checks on content on social networks. YouTube's AI age verification on its home turf indicates it is putting into place a form of compliance with the Australian and UK requirements, despite its persistent opposition to age-check requirements. 'Over the next few weeks, we'll begin to roll out machine learning to a small set of users in the US to estimate their age, so that teens are treated as teens and adults as adults,' wrote James Beser, director of product management for YouTube Youth, in a blog post titled Extending our built-in protections to more teens on YouTube. YouTube was promised an exemption from Australia's social media ban last year by the then communications minister, but the Australian government said on Monday that the platform would, in fact, be included in the country's ban on children under 16 using social networks. The ban is slated to take effect in December. Google, YouTube's parent company, strenuously advocated against the Australian ban and has threatened to sue to overturn it. On 25 July, the UK's long-awaited Online Safety Act took effect. The law requires social media and other internet platforms to implement safety measures protecting children – preventing them from accessing pornography or content that promotes dangerous behavior – or face large fines. Sign up to TechScape A weekly dive in to how technology is shaping our lives after newsletter promotion By testing the new AI tool in the US – the platform's second largest market after India – YouTube is following the example of other tech companies, which have in some cases followed tightened privacy regulations in the past by implementing stricter mandates for all their users. In the US, California often functions as a de facto tech regulator, both by virtue of playing host to many of Silicon Valley's biggest players and by passing stricter regulations than other states. Like Australia and the UK, some states in the US have passed age verification laws targeting social media sites, though these have not been interpreted as applying to YouTube. When YouTube determines a user is teen or pre-teen, the site will disable personalized advertising, activate digital wellbeing features and put stricter content filters as well as behavioral restrictions into place. YouTube's AI will assess a user's age via multiple behavioral factors, including what kind of videos the user searches for, the categories of videos they watch, and how long the account has been active, per its blog post. 'This technology will allow us to infer a user's age and then use that signal, regardless of the birthday in the account, to deliver our age-appropriate product experiences and protections,' Beser wrote, adding that the company has used the technology in other markets prior to introducing it in the US. If the AI's estimation is incorrect, YouTube says it will allow a user to verify their age with a credit card, a government ID or a selfie. How the Australian government will ensure that under-16s stay away from the world's largest video site, one of the internet's primary destinations for both children and adults, remains an open question. In June, a test of the technology meant to estimate Australian users' ages was 'not guaranteed to be effective'.
Reuters
22 minutes ago
- Reuters
Dollar advances against peers after strong GDP data and with Fed in focus
NEW YORK, July 30 (Reuters) - The dollar advanced against major peers on Wednesday following better-than-expected U.S. GDP data and as investors awaited the outcome of the Federal Reserve's policy meeting later in the session. U.S. economic growth rebounded more than expected in the second quarter, expanding by 3% compared with an estimate of 2.4% based on a Reuters poll of economists. The Fed is widely expected to leave interest rates unchanged, rebuffing persistent calls by President Donald Trump to cut interest rates. The euro extended losses against the dollar following the U.S. GDP data. It was down 0.65% to $1.1471, on track for the fifth straight session of losses and trading at its lowest level since June 23. The euro is also poised to record its first monthly drop in 2025, following a sharp reaction to a U.S.-European Union trade deal earlier this week. The dollar index added to its gains after the GDP report. It was up 0.56% at 99.442, hitting its highest since May 20 and on course to post its first month of gains this year. U.S. Treasury yields were mostly higher ahead of news from the Fed. The 2-year note yield, which typically moves in step with interest rate expectations for the Fed, rose 2.7 basis points to 3.902%. "I think people are reading too much into the GDP numbers; nobody in markets should think GDP was that weak in Q1 and that strong in Q2 even though the big drivers were inventories and net exports," said Steve Englander, head of global G10 FX Research at Standard Chartered in New York. "I will add the two quarters together and they averaged about 1.5% GDP growth per quarter, which is not a recession but qualifies as mediocre." Trade agreements struck with Japan last week and the EU over the weekend signalled a renewed U.S. commitment to global engagement, easing investor concerns. Investors' focus is now on negotiations between China and the U.S. after officials agreed to seek an extension of their 90-day tariff truce. But Trump upped the ante against India on Wednesday, announcing that a 25% tariff on imports starting August 1. "Trump can afford to be harsh on India because he's gotten a bunch of deals already and he's trying to pressure them to be more forthcoming. . . I don't think the tariffs will end as harsh as he hinted but he does want to negotiate with India on terms favorable to the US," Englander said. Data showed on Wednesday that the German economy contracted in the second quarter, while France's economy beat forecasts. The spotlight will be on comments from BoJ Governor Kazuo Ueda as investors hope the trade deal between Japan and the U.S. paves the way for the central bank to raise rates on Thursday. The dollar was firmer 0.28% to 148.88 against the yen , hitting a two-week high. Against the Swiss franc , the dollar strengthened 0.65% to 0.811 francs, reaching its highest since June 24.
