The British pound is experiencing upward pressure against the US dollar, driven by dollar weakness stemming from concerns over the Federal Reserve’s independence. Investors are closely watching upcoming UK GDP figures and potential shifts in the Bank of England’s monetary policy amid signs of easing inflation and a cooling labor market.
- The British pound rose toward $1.35, approaching last week’s more than three-month high of $1.357.
- Dollar weakness is attributed to concerns over the Fed’s independence following criticism and a subpoena.
- UK employers scaled back hiring in December due to rising costs and weak sentiment after the autumn budget.
- Markets have priced in nearly a 90% probability that the US central bank will lower the benchmark overnight rate by 25 basis points (bps).
- Financial markets are currently pricing in a high probability around 88% of a quarter-point reduction at the upcoming BoE’s December meeting.
Overall, the British pound is currently benefiting from external factors impacting the dollar. The future movement of the currency will likely depend on upcoming UK economic data releases, particularly the GDP figures, and the Bank of England’s monetary policy decisions in light of easing inflation and a softening labor market. Any surprises in either of these areas could trigger significant shifts in the pound’s value.