The British pound experienced an upward trend, surpassing $1.33, reaching a seven-month high. This movement occurred even as UK inflation data indicated a slowdown, with headline CPI and services inflation both easing. The weaker US dollar played a significant role in the pound’s rise.
- The British pound climbed above $1.33, its highest level in seven months.
- The rise was mainly driven by a weaker US dollar.
- UK headline CPI slowed to 2.6% year-on-year.
- Services inflation eased to 4.7%.
- Traders slightly raised bets on rate cuts, pricing in 86 basis points of easing by year-end.
- Growing odds of a fourth rate cut in December are being priced in.
- The data suggests the BoE may have more room to support the economy.
The pound’s strength, even with indications of cooling inflation, suggests external factors, particularly the weakness of the US dollar, are heavily influencing its value. The potential for the Bank of England to ease monetary policy further, coupled with concerns about global trade tensions and household costs impacting UK growth, creates a complex environment for the pound. Traders are anticipating continued easing, and this anticipation appears to be factored into the pound’s current valuation.