Daily digest market movers: Pound Sterling outperforms its major peers

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  • The Pound Sterling outperforms against its major peers on Friday. However, it is expected to face pressure due to tensions between Iran and Israel having converted into a full-fledged war after the assassination of Hezbollah leader Hassan Nasrallah. Oil prices have rallied amid tensions in the Middle East. Historically, a sharp rise in energy prices weighs on the currencies of those economies that rely heavily on imported oil, as it results in higher foreign outflows for them.
  • Besides that, BoE Governor Andrew Bailey’s commentary on the interest rate outlook on Thursday has also dampened Sterling’s outlook. The comments from Baily in an interview with the Guardian newspaper appeared dovish as he stressed the need to cut interest rates aggressively if price pressures continue to ease. 
  • Bailey said the BoE could become "a bit more activist" and "a bit more aggressive" in its approach to lowering rates if there was further welcome news on inflation for the central bank, Reuters reported.
  • On the economic front, the revised S&P Global/CIPS Construction PMI estimate has come in significantly higher at 57.2 unexpectedly. The Construction PMI, which gauges activities in the construction sector, was expected to have expanded at a slower pace to 53.1 from the preliminary estimates of 53.6.

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