Sterling Still At Risk On Supply Chain Issues
Sterling remained weak in early Europe yesterday, although the revised second-quarter GDP data did provide an element of support with a suspicion that the UK currency now offered better value after sharp losses.
The pound regained some territory ahead of the US open with a recovery from oversold conditions and a reluctance to abandon the potential for a Bank of England rate hike. There was further buying against both the euro and dollar with sterling pushing to higher before reversed again. Concerns surrounding the impact of high energy prices, supply chain issues and petrol crisis will continue to keep markets on its toes, that and weekend positionings could keep volatility high.
In level terms, GBP/EUR starts trading around the 1.16 region, The EUR/USD has also picked up slightly to trade at the 1.1585 mark whilst cable (GBP/EUR) still looks pretty weak at the 1.3440.
Data wise, the latest inflation readings from the US and the Eurozone are due. Over the past number of months inflation has risen sharply owing to base effects and supply shortages.