Weekly Roundup: Pound strengthens as UK outlook improves
Amy Richards December 5th 2022 - < 1 minute read
The pound fell early last week as a larger-than-forecast decline in the Confederation of British Industry’s (CBI) distributive trades data added to concerns about the UK economy.
The latest lending data also weighed on Sterling, with consumer credit and mortgage approvals both cooling, indicating an economic slowdown.
More downbeat news kept GBP on the defensive midweek. Food inflation hit a record high, while two separate surveys showed a drop in British business confidence.
However, Sterling roared higher on Thursday. A rally in European markets supported the increasingly risk-sensitive pound, while an unexpected improvement in the UK manufacturing PMI added to the optimism.
Also boosting GBP were comments from European Commission President Ursula von der Leyen, who said an agreement over the Northern Ireland Protocol was ‘within reach’. Her comments were echoed by Ireland’s Foreign Minister on Friday, helping Sterling hold strong.
So far this week, the pound has retreated. After the final services PMI printed in line with flash estimates, thin trading conditions have left Sterling vulnerable.
UK economic data is in short supply this week, so GBP investors may focus on domestic headlines. Northern Ireland optimism could support the pound, while worries about striking workers or the bleak economic outlook would likely weigh on GBP.