Key events
Introduction: Pound hovers near one-year high; Japan’s SoftBank buys UK chipmaker Graphcore
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The pound is hovering near a one-year high following yesterday’s stronger-than-expected GDP data, which showed the UK economy returned to growth in May with a 0.4% expansion. At the same time, US inflation came in lower than expected, falling to an annual rate of 3% in June from 3.3% in May, fuelling hopes of a September interest rate cut and driving the dollar lower.
Sterling hit a peak of $1.2947 yesterday, the highest level since late July 2023, and is approaching the $1.30 mark. This morning, it is up by a smidgen to $1.2911.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said:
In the UK, the pound was already bid yesterday morning after stronger-than-expected growth data helped traders scale back the expectation of an August cut from 70% to a coin toss. Combined with rising hawkish voices at the Bank of England, waning political risks and softening US dollar, we could see cable make an attempt on the $1.30 level. But the fact that the BoE hawks cry louder doesn’t mean that the doves are not around…
Japan’s SoftBank has bought the British artificial intelligence chipmaker Graphcore for an undisclosed sum, ending long-running speculation over the company’s future.
Once touted as a rival to US chipmaker Nvidia, which has seen its own valuation rocket thanks to booming demand for AI computer chips, Graphcore has struggled to secure the investment needed to compete.
Graphcore was valued at $2.77bn at the end of 2020, but the company’s losses widened and it said last October that it needed more cash. It slashed its workforce by a fifth to 494 staff, and shut down operations in Norway, Japan, and South Korea.
The Agenda
