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Posted July 24th, 2013 by Charles Purdy

Sterling steady as we await UK Growth data tomorrow | Smart Daily Currency Note

GBP/USD – 1.5383

Sterling traded within a narrower range yesterday as we saw a decrease in volatility across the currency markets. The pound has made reasonably consistent gains since last week’s Monetary Policy Committee meeting minutes were released. A report from the British Bankers’ Association released yesterday morning showed that UK mortgage approvals increased during June, although this increase was marginally lower than expected. As a result, the data had little overall effect and sterling made good the slight losses it experienced earlier in the day against the US dollar and weakened very slightly against the euro. Preliminary UK growth data for the second quarter will be released tomorrow and is likely to have a strong bearing on performance as investors look to ascertain how much faith to put in a sustained economic recovery for the UK. Ahead of that, the Confederation of British Industry releases data detailing expected industrial orders over the next three months this morning, which may also have cause a degree of volatility. Call in now to see how sterling reacts.

After a tough few days for the US dollar following on from the Chairman of the Federal Bank’s report to Congress last week, yesterday provided some respite. The dollar saw little movement against sterling and weakened slightly against the euro. A Bloomberg survey of leading economists revealed that that around half of those surveyed believed that the Federal Open Market Committee (FOMC) would reduce the pace of bond-buying by $20 billion per month in September. Such a result would boost dollar performance in the medium term, but is by no means assured at this stage. Furthermore, it may still be some time before interest rates are increased following any reduction of asset-purchasing and whilst the outlook is generally positive for a US recovery in the long term, it may be some time before we see any substantial dollar rally. Whilst uncertainty reigns, speculation by key figures and incoming economic data releases will continue to cause volatility. One of such releases will be occurring this afternoon and comes in the form of New Home Sales data from the US. Monday’s Existing Home Sales data contributed to dollar weakness on Monday and traders will look to today’s figures as a further indicator of economic strength or lack of economic strength. Call in now to keep pace with market movements.

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