Thursday was a good day for sterling, can Friday deliver similar fortunes? Equity market performance and technical considerations will be of great importance for the outlook of sterling on a day devoid of local economic releases.

Highlights:

@ 8:55: Sterling best peformer on Thursday
@11:12: UniCredit exchange rate forecasts tip GBP to head lower
@14:30: 2 months of GBP decline?  

15:10: A warm weather boom for sterling?

Positive surprises in GDP are naturally good for the value of the British pound; but how does the good weather fit into the equation?

As the UK experiences a second week of sun, Federation of Small Businesses (FSB) members continue to report big improvements in trade.

This is welcome news after the effect on business of the extended period of cold in the first half of the year.

FSB research from earlier this year found that more than half (55%) of UK small firms were impacted financially by the prolonged cold snap costing each business £1,580 in lost earnings.

Mike Cherry, National Policy Chairman, Federation of Small Businesses, said:

“It’s great that the warm weather is continuing to provide a boost to small businesses up and down the country, especially considering how long businesses had to suffer from the cold this year.”

14:30: Are we set for 2 months of GBP declines?

Stephen Gallo at BMO Capital Markets gives a stark warning concerning US dollar strength. This chimes with the view published at 13:16:

"We continue to see opportunities in EUR/USD and GBP/USD at these levels to position for 2-3-month USD strength.  In the latest USD sell-off, both pairs interestingly displayed higher risk-adjusted returns to the upside than they did to the downside in the wake of Bernanke’s “hawkish” June 19th press conference.

"Given the “rates anchoring” the ECB and the BoE have engaged in, we think those risk-adjusted returns to the upside should have been smaller, but perhaps weren’t due to a positioning squeeze in the USD. That may leave us with an open opportunity for further downside corrective motions in those pairs as things develop."
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13:16: TD Securities see selling opportunities in GBP-USD and EUR-USD

Shaun Osborne at TD Securities believes the US dollar is due a powerful comeback versus the Euro and British pound:

"The broad USD bid is seeing the EUR and GBP giving back some of their strong gains from the past two days. As mentioned yesterday, we continue to think that between the FOMC minutes and Bernanke remarks on Wednesday, the world is little changed and the massive market reaction was overdone.

"That leaves us overall better buyers of the USD, and in our minds the moves since Wednesday have opened up selling opportunities for EURUSD and GBPUSD."

12:18: GBP powers higher against the Australian dollar

Bit of a turkey shoot against the Australian dollar today. GBP-AUD now 0.89 pct up on Thursday's close at 1.6674.
Read why the Australian dollar is being punished today, and see ANZ Research's latest Aussie forecasts here.

11:12: The first of your Friday forecasts… and not great news for sterling

UniCredit have delivered their weekly FX forecasts; the reading isn't great for sterling bulls.

Dr. Vasileios Gkionakis, Global Head of FX Strategy at UniCredit Bank says:

"The net balance is thus expected to be negative for sterling, with cable seen drifting back towards 1.50."

See the forecast table here, and the latest pound euro analysis here.

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8:55: Surprise as sterling is Thursday's best performer

More from Lien on the strong performance of sterling over the past 24 hours:

Not only did the British pound trade higher against the U.S. dollar, but it was the day's best performer.  Sterling held onto nearly all of today's gains, rising almost 1% against the greenback.  What was surprising about the move is the lack of catalyst.

"There was no U.K. economic reports or market moving comments from policymakers. Bank of England member Miles spoke this morning and all he talked about was the Funding for Lending Scheme.  

"He said FLS is an insurance against a sharp rise in funding costs and the reason why it hasn't been used extensively is because banks funding costs have declined since the program began in August of last year. U.K.

"Chancellor Osborne said the economy is still dependent on monetary stimulus and indicated that central banks are "very focused on communicating the future path of interest rates." While he didn't mention the BoE specifically, Mark Carney's decision to provide a detailed statement after last month's monetary policy meeting indicates that he wants more transparency for the central bank and to provide more guidance to the market."

8:32: Great 24 hours for sterling

Kathy Lien at BK Asset Manangement sums up the performance of GBP over the course of the past 24 hours in succinct fashion:

"The only currency that trailed equities higher and held onto its gains was the GBP/USD."

So are we seeing a positive correlation between stocks and GBP?

8:33: Latest spot sterling exchange rates

The British pound sterling (Currency:GBP) is steady in early London trade, this in line with steady equity markets. A look at our benchmark currency pairs shows:

The pound to euro exchange rate is flat at 1.1595.
The pound to US dollar rate is 0.26 pct in the red at 1.5141.
The pound to Australian dollar is 0.03 pct higher at 1.6534.

Please be aware that these are spot market quotes to which your bank will affix their own discretionary spread. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please learn more here.