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Below are Views On Sterling Pound makes an upsurge; to hit 103 by next week by Heena Naik, Research Analyst - Currency, Angel Broking Ltd

The month of August’21 had not been in favor of the Sterling Pound. Both GBPUSD and GBPINR plunged by more than 1.2 percent; touching the lower levels of 1.3631 and 101.15 respectively. There were host of factors that played with the negative trend of the Pound currency and one of them was the bullish trend in US Dollar Index. The employment scenario of the United States has improved considerably as job openings have jumped to a fresh record high in June while hiring has increased. This led to market speculation that the upbeat job data may prompt the Federal Reserve to announce tapering of its bond purchases sooner than expected. 

With respect to domestic factors, the economic data sets of United Kingdom for the month of July’21 came on a disappointing note which dented the market sentiments. Construction PMI, Retail Sales, Service PMI, Industrial and Manufacturing production came below than the expected levels indicating that some consumers skipped their purchases and stayed home due to rising COVID-19 cases. Though, UK’s GDP data came on a positive note but the growth rate was still smaller than it was before the pandemic struck. And there are fears that further recovery could be slowed by the spread of the Delta variant over the coming days. In addition, Brexit uncertainty also hovered over Sterling Pound keeping the currency in jitters. A lot of blue chip companies were seen leaving Britain ahead of its departure from the European Union.

All of the above factors could be blamed for Pound’s downfall in the month of August’21 up until now. Since the past two days, the trend of Sterling Pound has changed to positive. Both GBPUSD and GBPINR have surged by almost 0.70 to 0.40 percent respectively. This bullish trend of Pound is likely to continue for some more time. There are high chances that GBPINR (CMP: 101.65) could move towards 102.60 levels; break of which could push the currency towards 103.00 levels by the end of next week.

US Dollar Index, which was earlier trading higher, looks bearish and is expected to remain in the lower territory as the initial euphoria of sooner-than-later tapering has started to fizz out. Apparently, the view of Fed shifting away from its accommodative monetary policy has begun to change after Dallas Fed President Robert Kaplan said he might reconsider his hawkish stance if the virus harmed the economy.It seems that new cases, driven by the highly infectious Delta variant, have surged in parts of the United States with lower vaccination levels.

As there are no major data releases ahead this week from UK, the Pound currency will focus on the US data and the virus case situation in the UK, which is currently under control so far.

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