Market sentiment surrounding the British pound is bullish, driven by a weakening US dollar and positive domestic economic data. The pound has reached a four-month high against the dollar. Investors are also anticipating the Federal Reserve’s policy announcement and assessing geopolitical and trade tensions.
- The British pound climbed above $1.36, reaching its strongest level since early July.
- The US dollar softened amid market caution over potential yen intervention in Japan and speculation about a dovish successor to the Fed Chair.
- GBP/USD reached four-month highs around 1.3680.
- The Composite PMI jumped to 53.9 in January, exceeding expectations.
- The Services PMI came in at 54.3, also higher than estimates.
- The Manufacturing PMI rose to 51.6.
- Retail Sales grew by 0.4% month-on-month and 2.5% year-on-year, exceeding expectations.
- Strong UK Retail Sales data is expected to weigh on market bets for interest rate cuts by the Bank of England (BoE) in the near term.
- Next week will be light in terms of UK economic data, and market sentiment and expectations for the Bank of England’s (BoE) monetary policy outcome at the February meeting are set to drive the Pound Sterling.
The British pound is experiencing upward momentum due to a confluence of factors, including external pressures on the US dollar and encouraging economic indicators within the UK. Strong business output and retail sales figures suggest a robust economy, potentially reducing the likelihood of near-term interest rate cuts by the Bank of England. Looking ahead, sentiment surrounding monetary policy decisions will likely be a major driver of the pound’s value.