The British Pound settled around $1.38 at the end of January, near a four-year high, boosted by US dollar weakness. Concerns over sticky UK inflation limit the Bank of England’s scope to cut interest rates, while lower-than-expected UK mortgage approvals and consumer credit for December were reported. The GBP/USD pair is also impacted by US political and economic uncertainties, including presidential announcements and Federal Reserve policy.
- Sterling recorded a 2% gain over the month.
- US dollar weakness followed the Federal Reserve’s decision to keep rates unchanged.
- President Trump’s signals that the administration is comfortable with a weaker greenback.
- Fresh BRC data indicated accelerating price pressures in the UK.
- Bank of England’s monetary indicators revealed lower-than-expected mortgage approvals and consumer credit for December.
- GBP/USD nears 1.3800 as the US Dollar turns south.
- Supportive fundamentals temper near-term Bank of England (BoE) rate cut expectations.
The British Pound is benefiting from a combination of factors. A weaker US dollar due to policy uncertainty and comments from the US president is a tailwind, while domestic UK inflation concerns limit the possibility of interest rate cuts. This contributes to the strength of the GBP/USD pair, although economic indicators like mortgage approvals need monitoring.