The British pound is holding firm near a ten-week high, trading above $1.363. The market is anticipating the Bank of England’s upcoming decision, widely expected to maintain the current interest rate of 4% and potentially slow the pace of bond unwinding. UK inflation and employment data have recently been released, broadly meeting expectations, which has contributed to relatively stable market sentiment surrounding the pound.
- The British pound held above $1.363, close to its highest in over ten weeks.
- The Bank of England is expected to leave rates at 4% on Thursday while slowing its £100 billion annual bond unwind.
- UK inflation remained at 3.8% in August, matching the 18-month high recorded in July.
- Unemployment remained steady at 4.7%.
- Wage growth was 4.8% excluding bonuses and 4.7% including bonuses.
- Payroll declined slightly by 8,000.
- BoE rate-cut bets were little changed, with markets pricing only a one-in-three chance of a move by December.
The British pound’s resilience can be attributed to a combination of factors. Stable inflation and employment figures suggest a healthy economy, providing a foundation for the currency. The expectation that the Bank of England will maintain its current monetary policy also offers support. However, the possibility of a future rate cut, even if perceived as unlikely in the near term, continues to linger in the background, potentially influencing future movements of the pound.