Sterling climbs above $1.3 Markets await important data Odds of a BOE rate cut in September recede The pound rose in European trade on Thursday against a basket of major rivals, maintaining gains for the sixth straight session against the dollar, and about to touch 13-month highs, especially after trespassing the psychological barrier of $1.3 recently following a batch of data that showcased the flexibility of the UK economy.

The data dragged the odds of a Bank of England rate cut in September down, in turn boosting the pound.

Now traders await important UK manufacturing and services data later today.

The Price

The GBP/USD pair rose by over 0.1% to $1.3108, with a session-low at $1.3081.

The pair closed up 0.45% on Wednesday, the fifth profit in a row, marking a 13-month high at $1.3120 as the dollar sustained losses against most major rivals.

Economic Flexibility

Official UK data last week showed total GDP grew by 0.6% in the second quarter, matching expectations.

The data shows that GDP growth remains at the upper limit of the pre-Covid 19 era.

Capital Economics analysts note that the data might give BOE officials some assurances that even as growth picks up, inflation continues to taper off.

UK retail sales also rose as expected in July, confirming the resilience and strength of the UK economy in the third quarter.

UK Rates

Following the data, the odds of a Bank of England interest rate cut in September stood at 40%, and at 50% for a November rate cut.

US Rates

According to the Fedwatch tool, the odds of a 0.5% interest rate cut by the Federal Reserve in September stand at 35%, with the odds of a smaller 0.25% cut standing at 65%.

Rate Gap

The current UK-US interest rate gap stands at 50 basis points in favor of the US, and will likely shrink to 25 basis points in September.