UK GDP data beat expectations by a nice margin — 1.1% vs. 0.6% — and now the British pound is rocking higher.
Despite euro optimism thanks to today’s bank stress test results, the British pound could be the real winner over the next 24 hours.
Tom Hampton @ Caxton FX:
“Following the announcement, sterling jumped up across the board. Sentiment that the UK economy is pulling out of recession better than most is growing, and as countries like the US continue to publish poor economic data, the pound will continue to benefit”
“Sterling and the euro are seemingly leading the way in the global recovery as positive GDP data from the UK and solid manufacturing and service data from the eurozone far outstrip that from the US. Over the past couple of months, the US economy has stumbled and there is talk of a re-introduction of quantitative easing. Dovish sentiment from the Fed Chairman over the past couple of days in his Monetary Policy speeches has also added to America’s woes,”
“Results today reaffirm our view that sterling will hit 1.22 against the euro in August and 1.27 by the end of the year. Against the greenback we could also see considerable growth as negative data continues to stream out of the US. This marks a shift in risk sentiment as stock markets continue their ascent.”