Sterling Soars on Strong UK Growth Data

The UK economy's growth data has boosted sterling against both the dollar and euro. The pound ended the week firmer after the stronger-than-expected June growth figure was released, which shows Britain on track for its strongest first-half growth in the G7.

MUFG, a Japanese bank, notes that the reading indicates an economy that's held up better than expected despite being hit by energy prices tied to the US-Iran conflict. The data has also led to calmer currency markets, making 'carry' trades more attractive again.

'Carry' trades involve investors borrowing in low-interest currencies like the Japanese yen or Swiss franc and buying higher-yielding ones to collect the rate gap. Sterling often fits this bill because UK short-term interest rates remain well above the eurozone's, helping it do best versus the euro when markets are quiet.