The pound sterling strengthened after the publication of data on the growth of the British economy in August. The dollar weakened amid concerns about the debt burden in the artificial intelligence sector.
The pound sterling showed growth in the foreign exchange market after the release of fresh data on the UK economy. The National Statistics Office reported that the country's GDP in August increased by 0.1 percent, although analysts expected a decline of 0.1 percent. In annual terms, growth amounted to 2.1 percent — this is the maximum result since October 2022. The volume of production in the manufacturing industry rose by 1.2 percent per month.
As of 12:00 Moscow time, the pound added 0.51 percent to the dollar and reached the mark of 1.3259. The euro strengthened by 0.56 percent and traded at 1.1216.
Chief Economist at Capital Economics for the UK Paul Dales noted the economy's resilience to high energy prices and borrowing costs. At the same time, he expects that further slowdown in inflation may restrain growth rates. Director of Financial Markets Online Samuel Fuller pointed out that the data gives the Bank of England an opportunity to focus on reducing inflation. According to him, the market generally expects the base rate to be raised to 4 percent in the next three weeks.
The dollar index previously reached its 2026 maximum, but then reversed during the Asian session. The dollar rally began after the release of US inflation data, but then short-term Treasury bond yields and the dollar itself reversed the growth. Global Head of Markets at ING Chris Turner linked the dollar's weakening to growing concerns about the debt burden of companies in the artificial intelligence sector. He noted that instead of being a safe-haven asset, the dollar is weakening amid a reassessment of the Federal Reserve's cycle towards easing.
The next important events will be data on retail sales and the producer price index. According to Turner, strong indicators may make the market think about the speed of tightening of the Fed's policy. ING believes that the dollar has already grown enough over the last month and may face sellers in the area of 102.40–102.50. In case of continued correction in the AI sector, the EUR/USD pair could return to levels of 1.1300–1.1350.