Pound bounces back against US dollar

Sterling has rebounded today, after hitting its lowest level against the dollar since March on Friday.

GBP/USD had climbed 0.45% to $1.4950 to the pound by mid-afternoon in New York, ahead of tomorrow’s release of industrial production data for the UK by the Office of National Statistics.

The consensus of expectation from a survey by Thomson-Reuters is for industrial production to have increased by 0.3% in May, which would be further evidence that the growth of the UK’s economy is beginning to accelerate.

UK growth has lagged behind that of the US since the banking crisis that caused a global recession, but recent data has been promising.

The pound plunged through $1.49 after the Bank of England rate announcement last week, in which new Governor Mark Carney indicated the MPC’s intention to maintain its benchmark interest rate at a record low of 0.5%, stating that UK growth is weak judged against historical levels.

GBP/USD dropped as far as 1.4858 on Friday, its lowest since 12 March.

The pound’s gains against the US dollar are part of a decline in the dollar against a wide selection of its peers today, after US treasury yields retreated. Both the US and the UK have had a raft of robust economic data recently, but neither the Fed nor the BoE are likely to be in a rush to raise interest rates, even if economic data remains strong enough for the Fed to begin to wind down its stimulus later this year. Ben Bernanke is speaking this Wednesday in Boston.

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