Sterling Defies Yield Spreads Amid UK Growth Resilience

The Pound Sterling has been defying expectations despite less favorable yield spreads, according to MUFG foreign exchange analysts.

Cable finished the week at 1.3534, close to its August highs after a late burst of Sterling demand carried it firmly above 1.3500.

MUFG describes Pound Sterling as the 'best performing major currency so far in August', citing stronger UK consumption, investment, and services growth.

The bank points to the latest UK growth figures, which show a 0.4% expansion in the second quarter after 0.6% growth in Q1, indicating that activity has weathered the energy shock better than feared.