Sterling Strengthens to 3-Week High
The British pound climbed to around $1.333 on Friday, its strongest level since September 22, after stronger-than-expected UK economic data reinforced expectations of a possible Bank of England rate increase next month. GDP grew 0.1% in August following July’s 0.4% expansion, beating forecasts of a contraction, while output rose 0.7% over the three months to August. The economy’s resilience has strengthened the case for tighter monetary policy, with markets still largely anticipating a 25-basis-point hike on November 5, although expectations have eased slightly. Governor Andrew Bailey said there was limited evidence that higher energy costs were feeding into wages and broader prices, but warned it was too early to assess the full impact. Other policymakers have urged earlier action against inflation risks. Investors are also watching Chancellor John Healey’s upcoming budget, which aims to ease household pressures while maintaining plans to reduce the deficit.
The British pound climbed to around $1.333 on Friday, its strongest level since September 22, after stronger-than-expected UK economic data reinforced expectations of a possible Bank of England rate increase next month. GDP grew 0.1% in August following July’s 0.4% expansion, beating forecasts of a contraction, while output rose 0.7% over the three months to August. The economy’s resilience has strengthened the case for tighter monetary policy, with markets still largely anticipating a 25-basis-point hike on November 5, although expectations have eased slightly.
Governor Andrew Bailey said there was limited evidence that higher energy costs were feeding into wages and broader prices, but warned it was too early to assess the full impact. Other policymakers have urged earlier action against inflation risks. Investors are also watching Chancellor John Healey’s upcoming budget, which aims to ease household pressures while maintaining plans to reduce the deficit.