Dollar weakness supports Sterling bulls
FXTM Research Analyst Lukman Otunuga comments.
Sterling ventured to its highest level in 10 months against the Dollar on Tuesday, after the UK Manufacturing Purchasing Manager’s Index rose to 55.1 in July. With UK manufacturing growth rebounding from a seven-month low in July, some fears have receded over a deceleration in economic momentum and this was reflected in Sterling’s appreciation. Although Sterling has started the trading week on a firm footing, with Tuesday’s positive economic data keeping the currency buoyed, the key driver behind the GBPUSD’s resurgence remains Dollar weakness.
This is a big week for the British Pound, with volatility expected as investors brace for Thursday’s Services PMI report, the BoE policy decision and the release of its latest quarterly inflation report. A vulnerable Dollar has elevated the GBPUSD to above 1.3200 and further upside is on the cards if bulls secure another daily close above the 1.3200 level.