The British Pound is under pressure against the US Dollar, hovering near one-month lows. While recent UK economic data has been surprisingly positive, including strong PMI figures, retail sales, and public sector net borrowing, a strengthening US Dollar driven by hawkish Federal Reserve signals is overshadowing these gains. Concerns about a softening UK labor market and expectations of a potential Bank of England interest rate cut are also weighing on the currency.
- Sterling is near a one-month low against the dollar, around $1.35.
- UK private-sector activity expanded at its fastest pace since April 2024.
- January retail sales exceeded expectations.
- Public sector net borrowing showed a large surplus in January.
- The UK unemployment rate climbed to 5.2% in the three months to December.
- The number of people claiming jobless benefits rose in January.
- Wage growth moderated, reaching its lowest level in almost four years.
- The market anticipates a potential interest rate cut by the Bank of England.
- The US Dollar is strengthening due to hawkish Federal Reserve sentiment.
The British Pound faces headwinds from multiple directions. Although the UK economy shows signs of robust activity and fiscal strength, a strong US Dollar and concerns about the UK labor market are creating downward pressure. Expectations of monetary policy divergence between the Bank of England and the Federal Reserve are further complicating the outlook for the currency. Upcoming UK inflation data and US economic releases could provide further direction, but the overall sentiment points to continued vulnerability for the British Pound in the near term.