The British pound is experiencing a period of upward momentum, nearing a 10-week high as market participants anticipate significant central bank announcements and upcoming economic data releases from the UK. The Bank of England’s upcoming policy decisions and the release of key UK economic indicators are expected to influence the pound’s trajectory.
- The British pound climbed past $1.360, close to a 10-week high.
- The Bank of England is expected to hold its policy rate at 4% on Thursday.
- The Bank of England is expected to slow the pace of its £100 billion annual bond unwind.
- UK inflation for August, due Wednesday, is seen at 3.8% year-on-year, matching July’s 18-month high.
- UK jobs report and retail sales data will follow later in the week.
- Markets currently see a one-in-three chance of a BoE cut by December.
- The Federal Reserve is expected to cut rates by 25 bps on Wednesday.
- Traders are pricing in at least two further Federal Reserve reductions by end-2025.
The current environment suggests potential for continued volatility in the pound’s value. Expectations surrounding the Bank of England’s monetary policy decisions, coupled with upcoming inflation, jobs, and retail sales data, will likely act as key drivers for the currency’s performance. Furthermore, the anticipated actions of the Federal Reserve, specifically rate cuts, introduces another layer of complexity by potentially influencing relative currency valuations.