The Pound dropped against the US Dollar for the fourth consecutive week, but it managed to hold above the lows seen in August and maintained the 1.260
0 level. The GBP/USD was pushed lower by a stronger US Dollar. The UK GDP report presents optimism regarding next week's economic data, potentially supporting the Pound. In the US, following the release of inflation data, attention will shift towards the FOMC meeting minutes, Retail Sales, and Federal Reserve officials' comments. The US Dollar was one of the top-performing currencies last week, benefiting from robust US fundamentals and cautious market sentiment.
Growth data from the United Kingdom showed that the economy avoided stagnation during the second quarter. The figures released on Friday exceeded expectations and provided a modest boost to the Pound. Gross Domestic Product expanded by 0.2% during the second quarter, surpassing expectations of 0% and exceeding the 0.1% growth in the first quarter. June showed a growth rate of 0.5%, above the expected 0.2%, and recovered from the 0.1% contraction registered in May.
Key numbers in the US were the inflation figures. The Consumer Price Index rose 0.2% on a monthly basis in July, with the annual rate at 3.2%, above the previous month's 3% and slightly below market estimates of 3.3%. Despite showing the first acceleration in 13 months, the numbers did not raise concerns about an escalation in inflation, providing evidence that the disinflation process is still ongoing in the US. The US for July came in slightly higher than expected, with the index rising 0.
A key driver of the Dollar's strength was the rise in US Treasury yields during the week, with the 10-year yield increasing from under 4.00% to 4.15%. The Treasury concluded a busy auction week with decent demand. UK bond yields jumped on Friday after the release of UK GDP, with the 10-year Gilt rate reaching 4.50%, the highest level in almost a month.Next week in the UK, there are several relevant economic indicators that will be closely watched.
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