Sterling rose in European trade on Thursday against a basket of major rivals, extending gains for the fifth straight session against the dollar, and scaling a five-month high on Bank of England's outlook.
Investors now expect the BoE to delay interest rate cuts as inflation in the UK remains stubborn.
GBP/USD
GBP/USD rose 0.25% to 1.2828, the highest since August 1, with a session-low at 1.2793, after rising 0.6% on Wednesday, the fourth profit in a row as US 10-year treasury yields tumble.
Sterling rose 6% so far this year against the greenback, on track for the first yearly profit in three years, and the largest yearly profit since 2017.
UK Inflation
Even as inflation in the UK receded to 3.9% in November, it remains far from the 2% official target.
In comparison, US consumer prices rose 3.1% last month, while European consumer prices rose just 2.4%.
Thus it's expected the Fed and the European Central Bank will commence policy easing soon enough, while Bank of England will take some time to catch up.
BOE
Bank of England said at the last meeting of 2023 that interest rates should remain high for an extended duration to combat inflation.
The BOE went as far as opening the door for yet more interest rate hikes if inflation failed to head towards the 2% target.
Bank of England Governor Andrew Bailey warned the road remains long before controlling inflation, and it remains too early to talk about interest rate cuts.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
