The pound sterling strengthened during July on the back of new stats and figures which show that the UK economy has shrunk less than had been feared by market analysts.
Stronger than expected economic performance by the UK economy helped buoy the currency with a smaller drop in GDP over the months since April.
The better than expected figures pave the way for some further interest rate rises, which also push up the attractiveness of sterling on money markets, even as it delivers pain to businesses and mortgage holders.
The resilience in the economy following several financial shocks will be seen as giving the Bank of England room to manoeuvre on controlling inflation without plunging the economy into recession, or so the thinking goes.
Notably the monetary committee in the central bank have been pretty much behind the curve when it came to the inflationary post pandemic period.
It’ll be interesting to see if they can get it right on inflation now, without tipping the baby out with the bath water.
