The Pound Sterling exchange rate (currency: GBP) remained broadly on the defensive as the week drew to a close, after the latest UK gross domestic product figures for the third quarter showed growth in the UK economy of 0.8%. The flash estimate was exactly in line with market expectations following a 0.7% advance previously. The services sector moved above the pre-2008 peak for the first time, while the construction and manufacturing sectors were still below the peaks. Although Sterling initially made a fresh push higher following the data, the release had been priced in and the UK currency was unable to sustain the initial gains.
There will be some concerns that the economy is losing some momentum and there will also be concerns that the global economic outlook will not be strong enough to underpin any further UK acceleration. The Bank of England will also be looking to resist pressure for any policy tightening with the November inflation report extremely important for market sentiment. The Pound has held steady on Monday with the Hometrack house price index increasing by 0.5%. The Pound to Dollar exchange rate held below 1.62 GBP/USD, while the Euro remained close to a two year high versus the Pound.
The Euro to Dollar exchange rate struggled to sustain a move above the 1.3825 EUR/USD on Friday, but was still able to avoid substantial losses, as underlying support remain firm. The latest German IFO business confidence index was slightly weaker-than-expected with a dip to 107.4 for October, from 107.4 for October, previously following five consecutive monthly increases.
There were also reports from ECB sources that the central bank had important reservations surrounding any move to negative interest rates and that there were concerns over the effectiveness of further rate cuts. Markets remained generally uneasy surrounding the risk of more aggressive ECB verbal intervention to prevent the Euro from getting even stronger. In the U.S, there was a stronger-than-expected headline U.S durable goods orders report with a 3.7% increase for September. The Dollar was still unable to break Euro support in the region of 1.3750 following a disappointing report on consumer confidence.
Data Released 28th October
U.K 10:00 Land Registry House Price Index (September)
U.K 11:00 CBI Distributive Trades (October)
U.S 14:15 Industrial Output (September)
U.S 15:00 Pending Home Sales (September)
Pound Sterling exchange rates today (at time of publish):
The Pound Sterling to Australian Dollar exchange rate is trading down 0.01% at 1.6848 GBP/AUD.
The Pound Sterling to Canadain Dollar exchange rate is trading up 0.17% at 1.6916 GBP/CAD.
The Pound Sterling to Euro exchange rate is trading up 0.17% at 1.1734 GBP/EUR.
The Pound Sterling to Dollar exchange rate is trading up 0.16% at 1.6172 GBP/USD.