The British Pound has been on an upward trajectory, gaining ground against the US dollar for seven consecutive days. This rally occurs despite recently released CPI data indicating a greater-than-anticipated slowdown in inflation. Traders are factoring in increased expectations for monetary policy easing by the Bank of England.
- The British Pound rose for a seventh straight day to $1.327.
- This marks the longest winning streak since July.
- The rise is largely attributed to a weaker US dollar.
- UK headline CPI fell to 2.6% year-on-year.
- Services inflation dipped to 4.7%.
- Markets are pricing in 86 basis points of easing by year-end.
- There is a perceived better-than-even chance of a fourth rate cut in December.
The pound’s resilience despite easing inflation suggests market participants are prioritizing other factors, such as the relative weakness of the dollar. Reduced inflationary pressures are expected to provide the central bank with greater flexibility to implement accommodative monetary policies, potentially supporting economic growth in the face of global uncertainties and pressures on household finances.