Pound is heading higher today, thanks in large part to the latest talk of a rate hike from the Bank of England. Even though the latest manufacturing data was a bit weak, expectations that the BOE will need to raise rates soon is helping sterling against its major counterparts.
Sterling is a bit higher today as speculation about a Bank of England rate hike continues. Policymakers remain mostly unshaken by concerns about a slowdown in China, and they talk about the possibility of higher interest rates soon. This confidence in the UK economy and this talk of boosting rates at some point in the relatively near future is helping the pound today.
Some of the pound’s gains are being pared, however, by the most recent economic news. UK manufacturing had a week month in July, with output down 0.5 per cent year over year. The news has dampened some of the enthusiasm for the UK economy, but not enough to send the sterling down too much. Because the UK economy is more service oriented than manufacturing oriented, the weak print isn’t as damaging.
For now, more eyes are on policy, and many Forex traders will compare BOE policy to Fed policy as the next meeting approaches.
At 12:38 GMT GBP/USD is up to 1.5396 from the open at 1.5370. EUR/GBP is down to 0.7279 from the open at 0.7292. GBP/JPY is up to 185.8040 from the open at 185.2350.
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