FX.co ★ Pound Holds Near Multi-Month High

The British pound hovered above $1.365, marking its highest point since early July, bolstered by a weakening US dollar and indications of intensifying inflationary pressures in the UK. According to data from the British Retail Consortium, shop prices climbed 1.5% year-over-year in January, the steepest increase since February 2024, significantly surpassing market forecasts of a 0.7% rise. This has reignited concerns over persistent inflation and may constrain the Bank of England's ability to lower interest rates in the near term. Concurrently, market sentiment remained tense as US President Donald Trump threatened to impose higher tariffs on South Korean imports, echoing previous warnings to Canada and Europe. Investors are now focusing on the upcoming US Federal Reserve policy announcement on Wednesday, with expectations that interest rates will remain unchanged. Speculation is also building around the potential announcement of a more dovish successor to current Fed Chair Jerome Powell later this week.