The economy data in the United Kingdom showed the impressive growth for the II/2021 quarter. However, the pound sterling was declined because of that.
The GBP/USD declined and reached its lowest range in two months around 1.3800 until the European trading session happened yesterday. A report from the ONS shows its impact.
That UK office for National statistics yesterday reported that the GDP growth in that country increased by 4.8 percent quarter – over – quarter. That has happened for the 3-month period.
The period will be ended on June 2021 in line with the consensus expectation. Meanwhile, the year – on – year GDP increased up to 22.2% which is quite significant.
The Research done by HSBC
The Annual growth in UK manufacturing and industrial output data also exceeded consensus expectations, thus generally underpinning the outlook for the domestic economy.
However, the global sentiment is likely to weigh on sterling. The GBP/USD actually fell from the opening at the level of 1.3866 to the range of 1.3808 based on the data.
EUR/GBP also continued to rebound for several consecutive sessions to occupy a week high range at the level of 0.8510s when this news was written. The HSBC research done lately showed something.
It said that Euro is transitioned to become a risk-off currency which is stronger when something happened. Meanwhile, Pound has been known as the risk-on currency.
The Major Causes of the Sterling Condition
Two major factors are contributed on the current sterling position. Those are the market concern due to the delta variant spread and the anticipation ahead of the policy change.
That policy change will be done by the Federal Reserve. The United States PPI data yesterday confirmed about the Fed tapering announcement prospect that will be done lately.
It can lift the USD position to some other major currency. Some analysts assessed that the Pound Sterling decline is temporary and it may become a chance to a buy position.
The world market trend and the Pound Sterling exchanges value in a long-term period is possible to move upward. It is especially for the sterling and euro pair.
The US Dollar also Declines
The USD felt to the lowest level in a week to some other major currencies in the Friday trade. When this news was written, the index of dollar was sold around 92.52 which was 0.5% lower.
In the other words you can say that the tapering optimism is prevented by the consumers trust. The University of Michigan or UOM released its survey about that.
It showed that the United States consumer sentiment index felt down from 81.2 to 70.2 in the first period of this August. That number is the lowest one since 2011 or 10 years ago.
That decline happened on the several levels of income, ages, and educations. In the other side, the consensus predicted that the consumers sentiment there will be stagnant on this month.
The Fed may Consider the Tapering Plan
The Declining US consumer confidence figures could make the Federal Reserve reconsider its stimulus tapering plan. That's what's weakening the United States dollar tonight.
In fact, the investors are faced by the ranging economic data owned by that country, especially for the last week session. The employment data and producers inflationary are better.
However, the consumers inflation and trusts are always falling from time by time. The main supporter this week is the option that the inflation pressure slow down will reduce the pressure.
It is especially for the Fed to do several reductions of the asset purchase as soon as possible. What is happening now is that the traders are moving aside their expectation due to the tapering.
