Pound soars to 13-month high against US dollar with UK fastest growing G7 economy

The British Pound Sterling has improved against the euro and hit a 13-month high against the US dollar.

On Thursday, the pound was at $1.31 against the dollar and €1.18 against the euro.

Equivalent private-sector surveys showed that Germany has suffered another economic downturn.

It is expected that the US will cut interest rates in September, and Germany’s struggles mean the European Central Bank could do the same.

Francesco Pesole at ING said: “The surveys have been a testament to the growing growth sentiment divergence between the eurozone and the UK.”

The news comes after a number of business sector surveys, including the newly published purchasing managers’ index (PMI) for August.

They indicate that the UK economy will grow by 0.3 or 0.4 percent in Q3 (July-September), down from the 0.6 and 0.7 percent growth in the first two quarters of 2024.

Experts have recently said that the UK was the fastest-growing economy in the G7 in 2024.

The Office for National Statistics director of economic statistics Liz McKeown said: “The UK economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year.

“Growth across the three months was led by the service sector, where scientific research, the IT industry, and legal services all did well.

“In June, growth was flat with services falling, due to a weak month for health, retailing, and wholesaling, offset by widespread growth in manufacturing.”

Reacting to the news, Chancellor Rachel Reeves said: “The new government is under no illusion as to the scale of the challenge we have inherited after more than a decade of low economic growth and a £22billion black hole in the public finances.

“That is why we have made economic growth our national mission and we are taking the tough decisions now to fix the foundations, so we can rebuild Britain and make every part of the country better off.”