The British pound experienced a slight increase against the dollar, reaching $1.347, as positive business survey data offset concerns about recent inflation figures. Market expectations regarding Bank of England policy have shifted, with reduced anticipation of near-term interest rate cuts.
- The British pound gained modestly to $1.347.
- UK businesses experienced their strongest month in a year.
- The rebound was driven by the services sector.
- Recent inflation data showed higher airfares as a significant factor.
- The inflation is unlikely to significantly alter the Bank of England’s policy path.
- Money markets see less than a 50% chance of a rate cut before end-2025.
- There’s approximately a 36% probability of a quarter-point rate reduction this year and the next.
- The next rate cut is likely priced in for spring 2026.
- Sterling has risen nearly 8% against the dollar in 2025.
The pound’s modest appreciation suggests resilience in the face of inflationary pressures, underpinned by a strengthening business environment. Reduced expectations of imminent interest rate cuts by the central bank are likely contributing to the pound’s relative strength. The currency’s performance year-to-date indicates a positive trend, possibly supported by underlying economic factors or relative monetary policy stances.