Pound Set for Weekly Gain as Strong Economy Boosts Sterling

The British pound is expected to rise against both the US dollar and the euro this week, thanks in part to better-than-expected GDP data. According to a Reuters report, sterling was last trading at $1.3521, up 0.25% on the day and a similar amount for the week.

Currency analyst Lee Hardman from MUFG attributed the pound's resilience to its ability to withstand the negative energy price shock triggered by the US-Iran conflict. Thursday's data showed the British economy grew by 0.3% during June, making it likely that Britain will have the strongest growth among the Group of Seven rich economies in the first half of 2026.

The pound is also benefiting from 'favourable carry conditions,' which means investors are borrowing in low-yielding currencies like the yen or Swiss franc to buy higher-yielding currencies, such as the British pound. With interest rate differentials in favour of Britain, this trend is expected to continue and support sterling's appreciation against the euro.