British Pound: Growth resilience supports gains against US Dollar – MUFG

MUFG’s Lee Hardman reports the British Pound (GBP) is the best performing major currency in August, with GBP/USD back above 1.3500. The United Kingdom (UK) economy is proving resilient to the energy price shock linked to the US-Iran conflict, with Q2 GDP up 0.4% after 0.6% in Q1. Strong private consumption, recovering business investment and robust services and IT activity are supporting the currency.

UK data and carry back Pound strength

"The pound is continuing to perform well this year."

"It has been the best performing major currency so far in August with cable rising back above the 1.3500."

"The pound has been supported by further evidence yesterday that the UK economy is proving more resilient than expected to the negative energy price shock triggered by the US-Iran conflict."

"It was revealed yesterday that the UK economy expanded by 0.4% in Q2 following strong growth of 0.6% in Q1."

"After stagnating following the Brexit vote in 2016 until the COVID shock in 2020, business investment has since regained upward momentum providing a tailwind for the UK economy."