LONDON, Sept 12 (Askume) – Sterling held steady against the dollar on Thursday after hitting a three-week low the previous day after data showed the UK economy stabilised in July, while focus remained on headline inflation due next week.
Sterling was little changed on the day, range-bound at $1.3052, slightly above Wednesday’s $1.30025, its lowest since Aug. 20.
Data released by the National Statistical Office on Wednesday showed economic output remained unchanged in July . A Askume survey of economists had forecast quarterly growth of 0.2%.
Although Britain’s economic growth has stalled in recent months, its economic growth has been stronger than the euro zone since the start of the year.
Kristine Kundby-Nielsen, currency analyst at Danske Bank, said: “If we look at the PMIs (purchasing managers’ index) we see signs of a continued deterioration in the euro zone, and if we look at the UK we see continued surprises in the euro.” The region “used to be the top.”
Sterling was little changed at 84.4p against the euro ahead of today’s European Central Bank (ECB) rate decision , which is widely expected to cut interest rates by 25 basis points.
At the same time, the Bank of England is scheduled to hold a meeting next week, and the futures market estimates that there is an 80% chance that interest rates will remain unchanged after a 25 basis point interest rate cut in August.
“I think they will only cut rates one more time this year,” said Danske Bank’s Quindby-Nielsen.
“This will play an important role and support the pound” as the European Central Bank and the Federal Reserve prepare to cut interest rates more aggressively, he said.
The Bank of England’s next key input will be inflation data on Wednesday, a day before its policy announcement.
UBS analysts believe core inflation will remain stable at 2.2%, but services sector inflation could rise to 5.5% due to volatile components.
UBS quoted the Bank of England’s Monetary Policy Committee as saying: “We do not think that the latest inflation data will have a significant impact on the Monetary Policy Committee’s assessment of the inflation outlook.”
“Against this backdrop, we expect a majority of the MPC to vote 7 to 2 in favour of keeping rates steady next week.”
