Pound Poised for Weekly Gain as Strong GDP Data and Carry Trades Boost Sterling
The British pound is poised for a weekly rise against both the US dollar and the euro due to stronger-than-expected GDP data released earlier in the week. According to MUFG senior currency analyst Lee Hardman, the UK economy has proven more resilient than expected to the negative energy price shock caused by the US-Iran conflict.
The data showed that Britain's economy grew 0.3% in June, putting it on track for the strongest growth among the Group of Seven rich economies in the first half of 2026. This has helped boost the pound against other major currencies.
Furthermore, favourable carry conditions are also benefiting the pound. In currency carry trades, investors borrow in low-yielding currencies like the yen or Swiss franc and use those funds to buy higher-yielding currencies, profiting from interest rate differentials. With British short-dated borrowing costs among the highest in developed markets, the pound is a popular choice for these trades.