FX.co ★ Sterling Holds at 7-Month High

The British pound surged past the $1.33 mark, reaching its peak in seven months, primarily due to a weakening US dollar, despite the release of less robust UK inflation data. The Consumer Price Index (CPI) decelerated to a 2.6% increase year-on-year, and services inflation dropped to 4.7%, easing the burden on the Bank of England. This development led traders to slightly adjust their expectations for rate cuts, now anticipating 86 basis points of reductions by the end of the year, with probabilities rising for a fourth cut in December. These figures indicate that the Bank of England might have additional leeway to bolster the economy, given the dampening effects of global trade tensions and rising household costs on economic growth. Concurrently, the US dollar index descended to its lowest point in three years, impacted by market concerns over the Federal Reserve’s autonomy and the economic threats posed by a possible global trade conflict.