Pound Moves Limited, Markets Monitor UK and US Data
The pound sterling moved limitedly against the US dollar on Tuesday (June 30th), after the market digested UK economic growth data and the US jobs report. GBP/USD briefly hovered around 1.3270, but the latest market update shows sterling weakening slightly to US$1.3233.
Data from the Office for National Statistics shows the UK economy grew 0.6% quarter-on-quarter in the first quarter of 2026, in line with preliminary estimates. This growth was primarily driven by the services sector, including computer programming, wholesale trade, and advertising.
However, the UK economic outlook is not yet entirely robust. On an annual basis, growth momentum remains limited, while households continue to face pressure from high prices and the cost of living. ONS data also shows that real household incomes remain depressed, thus reducing household purchasing power, making consumer spending a key market concern.
The pound's movement did not show a significant reaction to the GDP data. Investors believe the first-quarter growth figures have already been widely priced into the market, while greater attention is focused on the Bank of England's policy outlook, inflation, and UK political dynamics.
Politically, the market is also closely monitoring a speech by Andy Burnham, a leading candidate for the UK's next prime minister. Burnham promised political change through greater devolution of power to regional areas, but maintained a commitment to fiscal rules. This stance helped contain market concerns about the potential for overly loose fiscal policy.
From the US, the Job Openings and Labour Turnover Survey (JOLTS) report showed job openings held at around 7.6 million in May. This figure indicates that labor demand remains quite strong, although hiring is not yet fully solid. This data reinforces the view that the US labor market is not yet weak enough to prompt the Fed to immediately ease policy.
Other data showed that US consumer confidence improved in June, driven by lower gasoline prices after an interim deal between the United States and Iran helped ease energy pressures. However, perceptions of the labor market remain weak, indicating that consumers remain cautious.
On the central bank side, Bank of England Governor Andrew Bailey said UK inflation could still rise to around 3.2% this year. Bailey also emphasized that energy prices remain a key factor following the Iran conflict, although the recent drop in oil prices has given the central bank room to delay any hasty policy changes.
Meanwhile, Federal Reserve Bank of Cleveland President Beth Hammack made hawkish comments. She assessed that US inflation remains too high and that the Fed could consider raising interest rates if consumer data remains strong. This statement maintains market expectations that US monetary policy remains potentially tight.
Money markets are currently pricing in around 35 basis points of Fed tightening through the end of 2026. For the July meeting, the market still expects the US central bank to maintain interest rates. However, subsequent employment and inflation data will determine whether the likelihood of another rate hike increases.
Overall, GBP/USD remains in a tug-of-war between relatively stable UK data and the US dollar, which remains supported by expectations of high interest rates. As long as the Fed remains hawkish and US employment data does not weaken significantly, the pound's strength has the potential to remain limited. (arl)
Source: Newsmaker.id
