The British pound experienced a rise against the US dollar, reaching a one-week high. This movement was primarily driven by a weakening dollar in response to discussions between the US and South Korea regarding currency practices. Domestically, the UK saw a mix of economic data and comments from Bank of England officials, influencing market expectations regarding future monetary policy.
- The British pound rose above $1.333, a one-week high.
- The dollar weakened due to US-South Korea currency discussions.
- Deputy Governor Sarah Breeden highlighted the importance of bond market reforms.
- Catherine Mann emphasized the need for clearer signs of weakening pricing power before supporting more rate cuts.
- The UK jobless rate rose to 4.5%, the highest since 2021.
- Wage growth slowed in the UK.
- Market expectations slightly increased for the Bank of England to continue easing.
The pound’s recent appreciation against the dollar suggests short-term positive momentum. However, conflicting signals from the Bank of England and mixed domestic economic data present a complex outlook. While a weaker dollar provides an external boost, the potential for further rate cuts by the Bank of England, driven by rising unemployment and slowing wage growth, could limit further gains. The focus will likely shift to how the Bank of England balances inflation concerns with the need to support the UK economy.