FX.co ★ Sterling Approaches 3-Year High

The British pound surged above $1.347, nearing its highest point since February 2022, buoyed by encouraging economic indicators and eased cost-of-living concerns. April's retail sales rose 1.2% month-over-month, surpassing expectations and marking a continuous four-month increase. This suggests that consumer spending remains robust despite tax hikes and global trade tensions exacerbated by U.S. tariff strategies. Consumer confidence saw a rebound in May, with households expressing greater optimism regarding personal finances and an increased propensity for significant expenditures. Further lifting the positive sentiment, Ofgem disclosed a 7% reduction in the energy price cap effective from July, offering relief to households accustomed to previous hikes. Nevertheless, inflation persists at a stubborn 3.5% in April, exceeding predictions. Financial markets are currently factoring in a 50% likelihood of a Bank of England interest rate cut by August, with the potential for another by the end of the year.