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Highlights
- GBP gained strength against the USD and EUR on Friday
- Though USD remains on track to finish the week on best note since June 2021
- The euro also lost ground Eurostat estimated the inflation rate at 3.4%
The Great Britain pound (GBP) gained strength against the United States dollar (USD) on Friday, 1 October 2021, as the US dollar index weakened marginally against a basket of six currencies. Though the greenback remains on track to finish the week on the best note since June of 2021. The dollar is hovering near year-to-date (YTD) highs as currency market participants are embracing the US Federal Reserve’s indication of raising the interest rates before the major economies.
The Bank of England has also signalled a potential tapering in the bond purchases and a possible case for an interest rate hike before the March of 2022. The announcement has apparently fueled the rise in the domestic currency with the pound sterling moving northwards from the 9-month lows.
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According to the latest foreign exchange data available, the GBP vs USD pair traded at 1.3566, up 0.70% from the previous close of 1.3472. During the day, the currency pair has shuttled in the broad range of an intraday low and high of 1.3434 and 1.3571, respectively, at the interbank foreign exchange market.
GBP vs USD (1 October)
Source: EODHD/Others
With the present levels, the pound sterling looks likely to reclaim a level above 1.40 by the end of this year or highly likely before March 2022.
Meanwhile, the US dollar index tumbled 0.22% to 94.047 after losing the crucial level of 94. In the intraday trade so far, the index has oscillated between a high and low of 94.403 and 93.998.
The euro also lost ground against the domestic currency with the pound sterling strengthening near to 1.17 after a massive slide earlier this week. The GBP vs EUR currency pair was trading at 1.1698, up 0.60% from the last close of 1.1629. The euro weakened after the Eurostat revealed that the annual inflation rate for the Euro area in the month of September 2021 could escalate to 3.4%, as per the preliminary estimates.
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This could be the highest inflation rate for the European region since September of 2008, the time when the corporations were untangling the size of defaults during the global financial crisis.
Pound sterling has struggled to regain its momentum in the last quarter as the domestic businesses continue to face the adversities of supply chain crisis, limitedness of staff and other local challenges. In the last three-month period, the pound sterling shed as much as 2.5% against the greenback.
The Bank of England last fixed the spot exchange rate of 1.3484 USD and 1.1635 EUR against a unit of pound sterling on Thursday, 30 September.
