Sterling dropped another 0.8% against the USD yesterday and at the time of writing is trading at 1.3376. This is the lowest it has been in 5 weeks as the UK waits with bated breath for the Sue Gray report. Sterling is however holding its ground against the Euro, and broke back through the 1.20 marker. The deadline for the next potential Bank of England rate hike is quickly approaching us next week (3rd February) and there is improving sentiment in global markets that we could see another hike.
The Fed, like the Bank of England, is under pressure to hike rates sooner rather than later, with March being the most likely time, to control the rate of inflation which is at 7%. This can be seen as a contributing factor for GBP/USD falling and holding under 1.34.
German GBP for Q4 came out worse than expected at 1.4% down year on year versus the expected target 2.04%. With Germany being the largest economy in the EU, expect this to have a negative affect on the euro.
Have a good weekend.
Josh Saunders, Senior Relationship Manager.
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