22.12.202515:38:59UTC+00Sterling Rises to 11-Week High

The British pound recently surged to approximately $1.345, marking its highest level in 11 weeks. This rise is largely attributed to the weakening of the US dollar, as market analysts anticipate that the Federal Reserve will implement at least two interest rate cuts next year, thereby diminishing the dollar's yield superiority. In December, the Bank of England enacted a 25-basis-point rate reduction to 3.75%, a decision passed by a slender 5-4 margin, highlighting ongoing inflationary worries. While inflation decreased to 3.2% in November, it remains significantly above the Bank's target of 2%. Governor Andrew Bailey noted that although interest rates are expected to decline, the pace may be slower than market participants desire. The UK's GDP experienced a modest growth of 0.1% in the third quarter, which was in line with expectations; however, the Bank of England predicts stagnant growth for the final quarter. Despite this, there is speculation among traders that another rate cut will occur in the first half of the upcoming year. Sterling has appreciated by over 1% this month and has seen an approximate 7% increase since the start of the year.