The British Pound has shown resilience, paring losses against the dollar and holding near $1.34 after better-than-expected UK economic growth data. This positive GDP release has slightly shifted market expectations for monetary easing by the Bank of England, with traders now anticipating rate cuts later in the year. The Pound also benefits from a weaker Greenback.
- UK GDP rose 0.3% in November, exceeding forecasts of a 0.1% increase.
- Over the three months to November, GDP expanded 0.1%, defying expectations of a 0.2% contraction.
- Market expectations for monetary easing have adjusted, pricing in around 46 basis points of cuts by year-end.
- There is an 84% probability of a second 25-basis-point rate reduction in December.
- A first rate cut remains fully priced in by June, with an 88% chance it will occur in April.
- The Pound Sterling trades 0.2% higher near 1.3445 against the US Dollar.
- The UK Office for National Statistics (ONS) is expected to show that the economy expanded 0.1% in November.
- BOE policymaker Alan Taylor expects interest rates to fall to their neutral levels soon.
The British Pound is demonstrating strength on the back of positive economic data, which has tempered expectations for aggressive monetary easing. The currency’s performance is further supported by a weaker dollar and global central bank support for central bank independence. This suggests a potential for continued stability or further gains for the pound in the near term, contingent on sustained economic performance and the evolving monetary policy landscape.