The British pound surged past $1.35, reaching a peak not seen in over two weeks, as traders tempered their predictions for interest rate cuts by the Bank of England. This shift followed remarks by policymaker Megan Greene and the release of robust UK economic data. Greene highlighted a central bank survey indicating that the decline in wage growth has likely concluded, and she appeared less worried about the slowing pace of disinflation. Additionally, she noted that a more relaxed monetary policy in the US could bolster higher inflation in the UK.
Furthermore, data from S&P Global PMI revealed that the UK's private sector activity expanded in January at the quickest rate since April 2024, while retail sales rose by 0.4% in December, exceeding forecasts. Consumer confidence also reached its highest level since August 2024. These findings were on the heels of earlier data showing an unexpectedly high headline CPI of 3.4% in December.
Meanwhile, US-Europe trade tensions saw a temporary reprieve after President Donald Trump announced he would hold off on imposing tariffs on European goods, following opposition to his proposed Greenland plan.
